Capital Gains Documentation

John Ralls jralls at
Thu Oct 27 10:32:27 EDT 2016

> On Oct 26, 2016, at 8:16 PM, DaveC49 <davidcousens at> wrote:
> Hi John,
> The asset classes are not defined fully in AASB 116 but it gives examples of
> what constitutes different asset classes
> e.g
> (a) land; (b) land and buildings; (c) machinery; (d) ships; (e) aircraft;
> (f) motor vehicles; (g) furniture and fixtures; and (h) office equipment.
> If you apply revaluation to one asset in a given class you are required to
> apply it to all assets in that class and at the same time.
> The following paragraphs define the options available after recognition of
> an asset
> 29 An entity shall choose either the cost model in paragraph 30 or the
> revaluation model in paragraph 31 as its accounting policy and shall apply
> that policy to an entire class of property, plant and equipment.
> Cost Model
> 30 After recognition as an asset, an item of property, plant and equipment
> shall be carried at its cost less any accumulated depreciation and any
> accumulated impairment losses.
> Revaluation Model 31
> After recognition as an asset, an item of property, plant and equipment
> whose fair value can be measured reliably shall be carried at a revalued
> amount, being its fair value at the date of the revaluation less any
> subsequent accumulated depreciation and subsequent accumulated impairment
> losses. Revaluations shall be made with sufficient regularity to ensure that
> the carrying amount does not differ materially from that which would be
> determined using fair value at the end of the reporting period. 
> The 3-5 years seems to be a fallback position but the requirement is to
> revalue as often as necessary to reasonably track the fair value of the
> asset.
> Full text is at
> GAAP is defined in Australia by the AASB ( Australian Accounting Standards
> Board in its standards which are derived from the
> IFRS international standards ( The
> GAAP are generally defined as the fundamental principles that the accounting
> standards are derived from and usually form an initial part of the standards
> definition.
> As far as I know the US is not a signatory to the IFRS but US standards
> follow the IFRS reasonably closely and accounting standards are determined
> in the US by the FASB ( . The US standards are
> available on that site. I think a basic but limited view of the standards is
> free
> The equivalent UK body is the Financial Reporting Council
> (
> I've not looked to closely at the UK as my stepson's brother is an
> accountant with PwC in London so I just ask him if I need to know anything
> about UK accounting.


Excellent explanation, thanks. I've only encountered the cost model. (Well, there's another one: The way fixed assets are accounted for by the military is seriously weird. We don't need to go into that here.)

So one more question: In your experience what proportion of your clients choose the revaluation model?

In the US, GAAP as established by the FASB is the accounting standard. The FASB and IFSB have been trying for decades to reconcile the two with limited success. My question about GAAP was thus directed at any US accountants on the list, hoping to get some guidance about whether the revaluation model is used here at all.

John Ralls

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