Thanks for your reply EH. On this basis, if a particular asset had £20,000 in the revaluation reserve of which £10,000 related to the land element and £10,000 related to the building element and the building element received a downward valuation of £12,000, would you write £10,000 against the buildings revaluation reserve and the remaining £2,000 against the CI&E? Do you split out the land and buildings element for all land and building assets or only if your componentisation rules require?
I agree with your proposed treatment £10k charged against the buildings RR balance and then the remainder £2k is charged to the CIES (through to the CAA via the MIRS). We hold separate revaluation reserve balances for land and buildings elements of all our assets (not just our componentised assets).
Yes, we do not net land and building reserve balances so if the building element ended up in a market impairment that would be charged to CIES after the reserve balance of the building is extinguished and the land value would still be held at historic less current cost. So yes the treatment is what we would do.
The Code specifically requires land and buildings to be accounted for as separate assets: 18.104.22.168 Land and buildings are separate assets and shall be accounted for separately, even when they are acquired together. Any gain or loss arising on the revaluation of a building must therefore be treated separately from any gain or loss relating to the land on which the building is situated.