Revaluation model (for the @CFA Level 1 exam) - part 1

[@sachinrampersaud3425]

All of a sudden, one of the hardest topics in FSA is now easy, thanks to you. Cheers!

[@MARKCRASTO]

Remarkable video and quality of teaching. Kudos to you mate!

[@letmeexplaincfa]

Very kind of you to say that👍🙏

[@albertoruiz3549]

Hey!!!!! I AM deeply grateful with You sir! I started watching the video series, 2 weeks before 23 Aug. The examen day. Yesterday I check the results. I PASSED! Your explanation of the topics was extremely relevant for the results. THANK YOU!!!!

[@letmeexplaincfa]

Thank you so much for taking the time to reach out. Congratulations on the PASS!!!

[@GeniusAjinkya]

Wow, just wow, I knew that gains are taken to revaluation reserve, but didn't know that its other effect is in OCI as well. Thank you so much for clearing my doubt.

[@letmeexplaincfa]

I’m very glad you’re clear on this now!👍

[@chanipapupan4337]

Thank you so so much for making all of these videos. I’m currently in Junior year struggling to find a way to ace my CFA level 1 exam. Your videos help me sooo much. I can’t thank you enough 🥺❤

[@letmeexplaincfa]

You’re very welcome!

[@siddharthadhikari2997]

Great video, especially the flow of revaluation gains and losses amount financial statements.

[@letmeexplaincfa]

Thank you so much for the comment🙏 I am very glad you found this useful!

[@sanyamjain3446]

Many people may not realise how much pain he took to teach, he is literally writing on mirror backwards, which we are reading normally !! World deserve teacher like u

[@letmeexplaincfa]

Don’t worry Sanyam, I don’t have to write backwards. The image gets flipped digitally in postproduction😉

[@antonioromero878]

I refuse to believe it gets flipped.

[@Bubiemomo]

Thank you so much for your videos. Im grateful

[@letmeexplaincfa]

Thank you! You are most welcome

[@ammanaayanpeace]

Excellent & crystal clear

[@letmeexplaincfa]

Thank you!

[@joaovitorpigozzo]

"Third, asset revaluations that increase the carrying amount of an asset initially increase depreciation expense, total assets, and shareholders’ equity. Therefore, profitability measures, such as return on assets and return on equity, would decline." Why does the excerpt say that depreciation expense is initially increased when it should have no impact over net income (bypassing P&L)?

[@letmeexplaincfa]

It is just the gain from the asset revaluation that bypasses P&L. Any subsequent depreciation of that asset does however appear as an expense in P&L.

[@siddhantdeshmukh5810]

Great video!! cleared a lots of concepts. What would happen incase of imparment? Let me guess, the revaluation surplus won't be affected if they were zero initially. So all the loss will go into the PnL and there won't be any change in OCI. Ok I am getting a hang of this now. If the imparment was equal to the initial appreciation then there will be a decrease in OCI but no change in PnL. Similarly if the imparment were less than the initial gain / the current revaluation surplus then, again there would not be any change in PnL but the OCI would reduce. Last but not the lease the example you mentioned -> if you end up loosing more than your initial revaluation surplus then both OCI and PnL are impacted

[@letmeexplaincfa]

Actually, any imparment is just treated the same as a downward revaluation, so the rules you mentoned apply. Thanks for your comment. I'm very happy you like the video.

[@davidkoo2503]

Do we have the debits and credits correct🤔. Increase in value should be a debit to asset and a credit to revaluation surplus? Or am I wrong? Thanks for the great guides

[@letmeexplaincfa]

Yes, that's 100% correct! Thanks

[@pratyushpathak2968]

This was a very good explanation

[@letmeexplaincfa]

Thank you! Glad you like it!

[@LukaAkhaladze]

Thanks, Mr. Wojciech! I've got an off topic question: Do you suggest going with the sequence of the AM session (First ethics, then quant etc.) or first dealing with all the other topics and then coming back to the ethics?

[@letmeexplaincfa]

Hi Luka, I think you should always start with the topic you are strongest in. Ethics is not a bad idea either as it typically allows you to build up a time reserve for the longer questions in other topic areas.

[@lucatintor4896]

Marvelous!!!

[@letmeexplaincfa]

Thank you🙏

[@joaovitorpigozzo]

Thanks for sharing!

[@letmeexplaincfa]

You are most welcome!

[@Digitalmenia]

really grateful 🙏 for it

[@letmeexplaincfa]

You’re welcome👍😀

[@aleem3609]

life saver

[@pritamkundu2779]

No disrespect, you explained a simple thing in such a over exaggerated way.

[@letmeexplaincfa]

Congratulations on finding revaluation simple. I can assure you most people need a bit of time to grasp the logic of OCI and how it links to Equity.