CA Inter P1 · Chapter 3 · Question 6 of 16
Case: Land purchased by Konark Hotels Ltd for ₹20,00,000 was revalued to ₹17,00,000 in year 1, the decrease being charged to the statement of profit and loss. In year 3 it is revalued to ₹23,00,000. Under AS 10, the amount credited to revaluation surplus in year 3 is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹3,00,000
Explanation
The year 3 increase is 23,00,000 - 17,00,000 = 6,00,000. AS 10 requires a revaluation increase to be recognised in profit or loss to the extent it reverses a decrease of the same asset previously recognised in profit or loss (3,00,000). The balance 6,00,000 - 3,00,000 = ₹3,00,000 is credited to revaluation surplus.
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