CFA Level I · CFA Level I Exam · Analysis of Long-Term Assets
Under IFRS, an entity that adopts the revaluation model for an item of property, plant and equipment is most likely required to:
The entity must revalue the entire class of assets to which the item belongs. IFRS prevents selective revaluation of single items, but it does not require yearly revaluation of all PPE, since frequency depends on how much fair values move.
- Arevalue the entire class of assets to which the item belongsCorrect
- Brevalue only the individual item whose fair value has changed
- Crevalue all property, plant and equipment every year
Explanation
IAS 16 requires that if one item is revalued, the whole class of PPE to which it belongs is revalued, which prevents selective revaluation. Revaluing a single item is not allowed, and revaluation need not be annual; frequency depends on how volatile fair values are.
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