Under IAS 16 (Property, Plant, and Equipment), how should unexpected subsequent asset revaluation increases be accounted for?
ACredited to Other Comprehensive Income and accumulated in Revaluation Surplus
BDeducted directly from retained earnings reserve
CRecognized immediately as operating profit in Income Statement
DIgnored until asset physical disposal
Explanation
* Revaluation increases are credited to Other Comprehensive Income (OCI) and accumulated in Equity under ‘Revaluation Surplus’.
* Exception: If reversing a previous revaluation deficit charged to P&L, it is recognized in Profit or Loss up to that deficit amount.
* Governed by IAS 16 standard.
Exam Relevance
- Topic: Financial Accounting
- Subtopic: Property, Plant & Equipment (IAS 16)
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