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

Vindhya Foods Ltd. holds a class of assets, namely its factory buildings, in its books. The company decides to adopt the revaluation model for its buildings. Which of the following is consistent with AS 10?

When one item of property, plant and equipment is revalued, the whole class to which it belongs must be revalued. Selecting only appreciated buildings is not allowed. The resulting surplus is credited to revaluation reserve, not the profit and loss statement, except where it reverses an earlier charge.

  1. AThe entire class of buildings should be revalued, not just selected buildingsCorrect
  2. BOnly the buildings that have appreciated may be revalued
  3. CEach building may be revalued in a different year at the company's choice, with no rule on the class
  4. DRevaluation surplus on buildings should be credited directly to the profit and loss statement

Explanation

AS 10 requires that when an item of PPE is revalued, the entire class of assets to which it belongs be revalued. Selective revaluation of only appreciated assets is not permitted, and the surplus goes to revaluation reserve rather than profit and loss (except to the extent it reverses an earlier decrease charged to profit and loss).

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