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ACCA Applied Knowledge · Financial Accounting · Tangible non-current assets

Under IAS 16, which statement about a company that adopts the revaluation model for a class of property, plant and equipment is correct?

When the revaluation model is adopted, the entire class of property, plant and equipment must be revalued, and revaluations must be frequent enough that carrying amount is not materially different from fair value. Selective revaluation of only some assets in a class is not allowed.

  1. AAll assets in that class must be revalued, and revaluations must be kept sufficiently up to dateCorrect
  2. BOnly the assets that have increased in value need to be revalued
  3. CRevaluation gains must always be credited to profit or loss
  4. DLand may be revalued but buildings on that land may never be revalued

Explanation

IAS 16 requires the whole class of assets to be revalued to avoid selective revaluation, and revaluations must be regular enough that carrying amount does not differ materially from fair value. Gains normally go to OCI, and buildings can be revalued alongside land.

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