To prepare the financial statement notes for Comptia Ltd regarding the machinery revaluation in compliance with International Financial Reporting Standards (IFRS), the following notes would be necessary.
NOTE 1: Property, Plant and Equipment
- Machinery
- Opening balance as at 1 January 2010: [Insert amount]
- Additions: [Insert amount]
- Accumulated Depreciation as at 31 December 2011: [Insert amount]
- Carrying Amount as at 31 December 2011: [Insert amount]
- Revaluation on 1 January 2012:
- Carrying Amount before revaluation: [Insert amount]
- Revalued amount: [Insert amount]
- Revaluation surplus recognized in other comprehensive income: [Insert amount]
- Accumulated Depreciation post-revaluation: [Insert amount]
- Carrying Amount as at 31 December 2012 after revaluation: [Insert amount]
The entity has applied the revaluation model as per IAS 16 Property, Plant and Equipment for its machinery, thus revaluing its machinery every two years.
NOTE 2: Depreciation Expense
- The depreciation expense for the machinery after revaluation is calculated based on the revalued amount and the remaining useful life of five years. The residual value continues to be Rnil.
- Annual Depreciation Expense:
\[ \text{Revalued Amount} / 5 \text{ years} = \text{Annual Depreciation Expense} \]
- The total depreciation expense recognized in profit or loss for the year ended 31 December 2012 includes depreciation expense related to the revalued amount.
NOTE 3: Deferred Tax
- Deferred Tax Asset / Liability on Revaluation Surplus:
- The revaluation surplus will lead to temporary differences that will result in a deferred tax liability.
- Tax effect of the revaluation surplus at 28%:
\[ \text{Revaluation Surplus} * 28% = \text{Deferred Tax Liability} \]
- Taxation on the capital gains (66.6% of the revaluation surplus).
\[ \text{Revaluation Surplus} * 66.6% * 28% = \text{Capital Gains Tax Liability} \]
NOTE 4: Revaluation Surplus
- The revaluation surplus included in other comprehensive income for the year ended 31 December 2012 is as follows:
\[ \text{Revaluation Surplus} = \text{Revalued Amount} - \text{Carrying Amount before Revaluation} \]
- This surplus is transferred directly to the non-distributable reserve in equity until the asset is derecognized.
STATEMENT OF CHANGES IN EQUITY
- For the year ended 31 December 2012, the movement in the revaluation surplus is detailed as follows:
| | Amount | |------------------------------------------|---------| | Opening balance of Revaluation Surplus | Rxxx | | Revaluation surplus recognized | Rxxx | | Other comprehensive income adjustments | Rxxx | | Closing balance of Revaluation Surplus | Rxxx |
NOTE 5: Future Implications
- There has been no intention to sell these assets; however, if the machinery is disposed of, the gain or loss on disposal should be calculated based on the revalued amount and the carrying amount at the time of disposal.
NOTE 6: Risk Exposures
- The enterprise acknowledges the risk associated with fluctuations in the market value of machinery due to economic conditions but has recognized a permanent reduction in the value of machine B, which is included in this report.
Final Note: Assumptions
- All calculations and evaluations in this financial statement are based on the management's estimates and current market conditions as of 1 January 20.12.
This format ensures that all required IFRS disclosures are complied with and provides transparency concerning the revaluation of machinery within the financial statements of Comptia Ltd. Be sure to input the appropriate amounts where indicated.
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