Treating accumulated depreciation when revaluing assets

Question

What entries should be made in the following situatuation according to the second option (accumulated depreciation is eliminated against the gross carrying amount of the asset and the *** amount restated to the revalued amount of the asset)?

For example, gross carrying value of the asset is $1,000, accumulated depreciation immediately before revaluation is $500, fair value of the asset is $400.

Is it right to treat it in this way?

Dr Acc depreciation - $500
Cr Revaluation surplus - $500

Dr Revaluation surplus - $600
Cr Gross carrying value - $600

So, gross carrying value is $400 after revaluation and acc depreciation is nil.

Answer 1

no you are wrong..
let me explain
At the end of each reporting period, an entity is required to assess whether there is any indication that an asset may be impaired (i.e. its carrying amount may be higher than its recoverable amount). IAS 36 has a list of external and internal indicators of impairment. If there is an indication that an asset may be impaired, then the asset's recoverable amount must be calculated. [IAS 36.9].
Here as the fair value is less then Carrying amount so we may considered that asset ahs been impaired and would pass general entry.
Asset at Fair value (Dr) 400 $
Impairment expense(Dr) 100 $
                   NBV of asset before revaluation 500$

Comments

Thank you for the reply. I meant revaluation model for PPE in the situation. And the matter is how to what effect on acc depreciation downward revaluation will have if i choose the 2nd option (elimination of depreciation).

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I Think you are asking about this entry..
Acc: depreciation 500 $ (Dr)
Asset at Fair value 400$ (Dr)
Impairment loss 100$ (Dr)
Asset 1000 $ (Cr)
after this entry, depreciation would be charged on new value of asset which is 400$

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Do we also eliminate in full accumulated depreciation if the fair value of an asset is more than its carrying value but difference between the fair value and carrying amount is less than accumulated depreciation? Or we just eliminate against acc depreciation only that difference?

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I think you are confused regarding treatment if we want to show assets on revaluation model..
let me explain again..
There are two methods
one is NBV method in which entry would be posted as this
Asset at Fair value (Dr) 400 $
Impairment expense(Dr) 100 $
                   NBV of asset before revaluation 500$
in this case fair value is less than NBV thats why we show impairment expense if the Fair value is more than NBV, then entry would be posted as like this
Asset at Fair value (Dr) 600 $
                   Revaluation surplus (Cr) 100$
                   NBV of asset before revaluation 500$
other method is gross value method, in which entry would be posted as like this
Acc: depreciation 500 $ (Dr)
Asset at Fair value 400$ (Dr)
Impairment loss 100$ (Dr)
Asset 1000 $ (Cr)

weather fair value is less then carrying amount or not, you have to adjusted whole amount of Acc: depreciation...
please let me know if still you unable to understand this concepts