I'm getting conflicting info from Becker and Wiley about the IFRS Revaluation model. Here's the question from Wiley:
Lawson Corp uses the revaluation model for intangible assets. On March 1, year 1, Lawson acquired intangible assets with an indefinite life for $100,000. On December 31, year 1, it was determined that the recoverable amount for these intangible assets was $90,000. On December 31, year 2, it was determined that the intangible assets had a recoverable amount of $94,000. What is the impairment gain or loss recognized in year 1 and year 2 on the income statement?
a) Year 1: $10,000 loss Year 2: $6,000 loss
b) Year 1: $10,000 loss Year 2: $4,000 gain
c) Year 1: $10,000 loss Year 2: $0
d) Year 1: $0 Year 2: $0
Becker says, Revaluation Losses go to the income statement and Gains go to OCI, exception is if the gain is reversing a previous recognized loss, then it'll go against the loss on the income statement or a loss that's reversing a previously recognized gain will go to OCI.
So my answer is b), year 1 loss will go to the income statement and the year 2 gain will also go to the income statement to reverse part of the previous loss.
Wiley says the answer is d) If the revaluation model is used for intangible assets, any gain or loss on revaluation is recored in other comprehensive income.
Which one is correct?
Becker, Wiley Test Bank, and Ninja 10 Point Combo!
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