I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

retained earnings in the statement of changes in equity. The closing balance of the accounts in the 

statement of changes in equity are then transferred to the statement of financial position. 

3.9 Gains on property revaluation 

Gains on property revaluation arise when a property is revalued. The revaluation is recognised in the 

other comprehensive income part of the statement of profit or loss and other comprehensive income and 

shown in the statement of changes in equity as a movement in the revaluation surplus. 

For example, an asset originally cost $10,000 and was revalued to $15,000. The gain on the 

revaluation is recognised in the statement of profit or loss and other comprehensive income (in the other 

comprehensive income section) and then shown as a movement in the revaluation surplus in the 

statement of changes in equity, as shown below.  

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME  

FOR THE YEAR ENDED 31 DECEMBER 20X8 – EXTRACT  

 

 

20X8 

 

 

$'000 

Gross profit 

  20 

Profit before tax 

15

 

Income tax expense  

  

 (3) 

Profit for the year 

  

12 

Other comprehensive income: 

  

Gains on property revaluation 

 

  5 

Total comprehensive income for the year 

  

17 

STATEMENT OF CHANGES IN EQUITY – EXTRACT 

 

  

Revaluation

  

Retained 

 

 

  

surplus 

  

earnings 

  

Total 

 

 

$'000

 

 

$'000 

 

$'000 

Balance at 1.1.X8 

– 

  10  

10 

Changes in equity for 20X8 

 

 

 

Total comprehensive income for the year* 

  5 

 12 

 17 

Balance at 31.12.X8 

  5 

 22 

 27 

* The total comprehensive income for the year is split into the gains on revaluation of property, which is 

credited to the revaluation surplus, and the profit for the year, which is credited to retained earnings. 

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CHAPTER 20  

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  PREPARATION OF FINANCIAL STATEMENTS FOR COMPANIES