- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 26. Long-lived Assets
- Subject 4. The Revaluation Model
CFA Practice Question
Under IFRS, if a revaluation initially increases an asset's carrying value by $2,000, and in a subsequent period the asset's carrying value is decreased by $5,000, ______
B. the $2,000 is recognized as a profit and the $3,000 is recognized as a loss.
C. both $2,000 and $5,000 go to equity directly.
A. the $2,000 increase goes to equity first. In the subsequent period the $2,000 decrease goes to equity and the remaining $3,000 is recognized as a loss.
B. the $2,000 is recognized as a profit and the $3,000 is recognized as a loss.
C. both $2,000 and $5,000 go to equity directly.
Correct Answer: A
The subsequent decrease first decreases the revaluation surplus of $2,000 and the remaining $3,000 loss is recognized in the income statement.
User Contributed Comments 1
User | Comment |
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cong | Once revaluation surplus account is depleted, loss results. |