How do I process revaluations in Manager along with their depreciations according to the revaluation model as established by IAS 16?
I do not see in the properties, plant and equipment Manager module such a possibility to comply with international regulations that are accepted in a large number of countries.
I also do not find the possibility of recording the impairment of property, plant and equipment as required by IAS 16 and IAS 36.
Through Journal Entry.
Thank you for your input, but this is not a practical, automated solution. Using software to go back 20 years is not helpful.
Investments are valued at Market price in Manager. For that you have to update Market Prices periodically in settings.
For Fixed Assets we dont know if thats on the road map or not. So currently only way is to do it through Journal Entry.
@gxtsoft, just how would you propose the revaluation process be automated? There is no conceivable way you could expect the Manager application to determine fair value of assets. That must be done either individually or by asset class.
@Tut I have never mentioned in my interventions that the software determines the fair value. Where did I note this so that it can tell me? My proposal is aimed at offering an option to manage changes in the fair value of the asset, as occurs with investments. A valuation expert provides the information and the user records it in Manager.
The option to manage these changes is already there. You can use a Journal Entry to record this infrequent adjustment – as @shahabb has already pointed out.
IFRS 16 doesn’t require a fancy tool to make these adjustments, in fact if you read through the standard or its interpretations, you will find examples of Journal Entries to process these adjustments
@Ealfardan It seems so simple. When a group of assets of a class is revalued, the revalued part must also be depreciated separately. Depreciation continues at cost and, on the other hand, at the revalued amount. There are two separate depreciations for each asset. Imagine controlling the fixed asset subsidiary through journal entries. For this purpose, it is better to manage it using a spreadsheet and omit the use of other technologies. It is not practical to depreciate a list of a certain amount of revalued assets through journal entries. It seems that you have not understood the idea that I propose. The revaluation surplus (accounting account located in equity) must also be frequently transferred to retained earnings.
I agree there would be merit to merging the functionality of fixed assets and investments.
Both need separation of realised and unrealised gains.
Depreciation is sometimes applicable to both.
Enabling the user to choose which are supported for each asset/investment would be great.
You are mixing up many things.
This only concerns “Component Accounting”. This only involves breaking down your single asset into it’s individual components.
For example, if you bought a CNC machine that comes with a compressor that:
Then you treat this CNC as two separate assets:
After this split on initial recognition, you simply treat these components as separate assets – compliance with IAS 16 achieved.
Now let’s deal with this:
They are already being depreciated separately since each component is already a separate asset.
Once you revalue the asset, you will have to reset it’s depreciation back to Zero and any gain will be reflected in your revaluation reserve:
In the example above we had an asset who’s cost was 120, nbv of 70 revalued to 100.
This is all that’s needed for compliance.
If you just read the standard text verbatim, things may appear more complicated than they really are in the practical sense of things.
Just record your assets at component level within Manager and compliance with IAS 16 will be a breeze
Good.
There is no mixing of issues here. Rather, you did mix them up by involving the treatment of the separation of components of a fixed asset. This is a topic that I am not going to refer to because it is not relevant to the matter being discussed. My suggestion is to read IAS 16 specifically the section on subsequent measurement.
Then what did you mean by this?
I agree with you. Possibly the wording on my part was not clear. What I tried to express is that the revalued amount of an asset is depreciated separately.
That wouldn’t be necessary.
Let’s continue our previous example, suppose the original asset life was 6 years, and we revalued it at 2.5 years by 100 giving us a new NBV of 70+100 = 170.
This is the result of depreciating the asset and the “revalued” amounts separately:
| Year | Asset NBV | Asset depreciation | Revalued NBV | Revalued depreciation | Total NBV | Total depreciation |
|---|---|---|---|---|---|---|
| 1 | 100 | 20 | - | - | 100 | 20 |
| 2 | 80 | 40 | - | - | 80 | 40 |
| 3 | 60 | 60 | 86 | 14 | 146 | 74 |
| 4 | 40 | 80 | 57 | 43 | 97 | 123 |
| 5 | 20 | 100 | 28 | 72 | 48 | 172 |
| 6 | 0 | 120 | 0 | 100 | 0 | 220 |
Now, let’s consider the above scenario where we simply continued depreciating with the new revised value of 220:
| Year | Asset Cost | NBV | depreciation |
|---|---|---|---|
| 1 | 120 | 100 | 20 |
| 2 | 120 | 80 | 40 |
| 3-H1 | 120 | 70 | 50 |
| 3-H2 —Now depreciated over the remaining useful life of 3.5 years |
170 | 146 | 24 |
| 4 | 170 | 97 | 73 |
| 5 | 170 | 48 | 122 |
| 6 | 170 | 0 | 170 |
If you notice the depreciation column shows the exact value when depreciating the revalued amount separately or when depreciating the entire new value at the remaining useful life.
So you can just continue depreciating your new total value over the remainder of the useful life, if this makes things easier for you – hopefully 
That is correct for every function in Manager.
So applying that logic, why should Manager implement any other way, and dispense with all the other dedicated modules / tabs.
The reason is the underlying credits and debits is clear for those with specialist accounting knowledge when thinking at that level. However when thinking at a higher level; the user data entry error rate is lower as well as accounts display are clearer if dedicated Manger functions are used.
So that leaves a program coding trade off:- is it worth Manger better supporting assets and investments?
Well, when you wrote the following, you seemed to imply that a journal entry (as pointed out by @shahabb in post #2) did not provide what you were looking for:
So I am left wondering what you wanted to “automate.”
On this, you are correct. And that was my point.
@Tut I don’t understand why you are surprised when I mention the word “automate”. What I am trying to cover with that term is so simple. Manager already has modules that support the user with an assistant for fixed assets measured at cost and, on the other hand, the management of depreciation at cost. The revaluation process can be automated by adapting those modules to also manage the effects of the fair value of each asset. That is why I still don’t understand your surprise.
I think we are well past economies of scale when it comes to the number of tabs and we are facing diminishing returns. It’s like studying for a PHD, you specialize and limit your scope until you know everything about nothing.
Trying to solve individual proplems individually can only get you so far and then you will end up spreading yourself too thinly, so much that you will stop functioning or at least be non-responsive.
Instead, I think Manager now needs versatility and well roundedness.
For example, what happens when asset revaluations are separated into their own thing? I would imagine we will be back to the point where fixed asset accounts are no longer accessible in other tabs.
Now what happens when there’s a change in standards? Users will be cornered.
I think a strong a versatile tool such as Journal Entries is an absolute necessity if we plan to adapt to ever changing requirements.
