ICAEW AF · Chapter 11 · Question 7 of 13
A company's building has a cost of £450,000 and accumulated depreciation of £70,000. It is revalued to £520,000. There have been no previous revaluations. How is the revaluation recognised?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A gain of £140,000 in other comprehensive income, accumulated in the revaluation surplus
Explanation
Carrying amount before revaluation = £450,000 - £70,000 = £380,000. Increase = £520,000 - £380,000 = £140,000. Under IAS 16, a revaluation increase is recognised in other comprehensive income and accumulated in equity as a revaluation surplus, unless it reverses a previous decrease recognised in profit or loss.
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