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ACCA Applied Knowledge · Financial Accounting · Statement of profit or loss and other comprehensive income

Which statement about a revaluation gain on land is correct for a company reporting under IFRS?

A revaluation gain on land is recognised in other comprehensive income and accumulated in the revaluation surplus within equity. It does not go through profit or loss, is not share premium, and is recognised when the revaluation is carried out rather than on sale.

  1. AIt is recognised in other comprehensive income and accumulated in a revaluation surplus within equityCorrect
  2. BIt is credited to retained earnings through profit or loss
  3. CIt is credited to share premium
  4. DIt is not recorded until the land is sold

Explanation

Under IAS 16 a revaluation gain (not reversing an earlier loss) goes to other comprehensive income and is accumulated in the revaluation surplus, which appears in the statement of changes in equity. It is not taken to profit or loss or share premium, and is recognised when the revaluation occurs.

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