ACCA Applied Knowledge · Financial Accounting · Disclosure notes
Which of the following would be shown in the revaluation surplus note rather than in retained earnings?
A gain on revaluing property under the revaluation model goes to the revaluation surplus via other comprehensive income, after reversing any earlier deficit charged to profit or loss. Disposal profits, dividends and depreciation affect profit or retained earnings instead.
- AProfit on disposal of an investment property carried at cost
- BA gain on revaluing a property under the revaluation model, net of any previous deficit charged to profit or lossCorrect
- CInterim dividend paid to equity shareholders
- DDepreciation charged on a revalued building
Explanation
A revaluation gain on property, plant and equipment is recognised in other comprehensive income and accumulated in the revaluation surplus, to the extent it exceeds any previous deficit charged to profit or loss. Disposal profits, dividends and depreciation relate to profit or loss or retained earnings.
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