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CA Intermediate · Advanced Accounting · AS 10 Property, Plant and Equipment

Rajesh Ltd. holds a building with a carrying amount of Rs 40,00,000 that was revalued upwards by Rs 10,00,000 in an earlier year (credited to revaluation reserve). In the current year the company revalues the whole class of land and buildings again. Which statement is correct under AS 10?

When any item of property, plant and equipment is revalued, the entire class to which it belongs must be revalued. Selective revaluation of individual assets is not permitted. A revaluation increase is generally credited to revaluation reserve rather than to the statement of profit and loss.

  1. ARevaluation of only the building is allowed, leaving other items of the same class at cost
  2. BRevaluation may be done selectively for individual assets in a class on a convenient date
  3. CRevaluation increase is credited directly to the statement of profit and loss as income
  4. DIf an entire class is revalued, all assets of that class must be revaluedCorrect

Explanation

AS 10 requires that when an item of PPE is revalued, the entire class of assets to which it belongs should be revalued. Selective revaluation is not permitted. Increases are normally credited to revaluation reserve, not profit and loss.

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