Both paragraph 35(a) of IAS 16 and paragraph 80(a) of IAS 38 currently require that, when revaluing using that option, the revalued accumulated depreciation/amortisation results from applying the same proportionate factor as for the change in the gross carrying amount.
The IFRS Interpretations Committee reported to the IASB that practice differed in the calculation of accumulated depreciation for an item of property, plant and equipment that is measured using the revaluation method in cases where the residual value, the useful life or the depreciation method has been re-estimated before a revaluation.
Consequently, the Board proposed in the Exposure Draft Annual Improvements to IFRSs 2010–2012 Cycle to amend paragraph 35 of IAS 16 and paragraph 80 of IAS 38 to address this by clarifying that:
- the determination of the accumulated depreciation does not depend on the selection of the valuation technique; and
- the accumulated depreciation is calculated as the difference between the gross and the net carrying amounts.