ICAEW AF · Chapter 11 · Question 9 of 13
A company revalues a piece of land downwards from its carrying amount of £150,000 to £120,000. The land has never been revalued before. How is the £30,000 decrease recognised?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) As an expense in profit or loss
Explanation
Under IAS 16, a revaluation decrease is recognised in other comprehensive income only to the extent that there is a credit balance in the revaluation surplus for that asset. Because the land has never been revalued upwards, there is no surplus to absorb the loss. The full £30,000 is therefore recognised in profit or loss.
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