A patent is carried under the revaluation model. It has been determined that the patent is impaired. There is a revaluation surplus of $25,000 and the impairment loss is $35,000. The revaluation surplus in OCI will have a debit balance.

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The revaluation surplus in OCI (Other Comprehensive Income) will decrease by the impairment loss amount until it reaches zero, and any remaining impairment loss would be recognized in profit or loss. Since the revaluation surplus is $25,000 and the impairment loss is $35,000, the surplus would be fully utilized, but it would not result in a debit balance; instead, the remaining $10,000 of the impairment loss would be recognized in the profit or loss statement.

A Patent Is Carried Under the Revaluation Model