ACCA Applied Knowledge · Financial Accounting · Depreciation
Under IAS 16, which statement about a company adopting the revaluation model for a class of property, plant and equipment is correct?
The whole class of assets must be revalued, and valuations must be kept up to date. IAS 16 prohibits cherry-picking only assets that have risen in value, and carrying amounts must not differ materially from fair value.
- AOnly the individual assets that have increased in value need be revalued
- BRevaluations can be done once and never updated
- CThe whole class of assets must be revalued, with revaluations kept sufficiently up to dateCorrect
- DRevaluation surplus must be transferred to profit or loss when the asset is depreciated
Explanation
IAS 16 requires that if an asset is revalued, the entire class of PPE to which it belongs is revalued, and valuations must be regular enough that carrying amount does not differ materially from fair value. Selective revaluation is not permitted.
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