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, ______

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.