medium · Financial Accounting accounting-cycle-financial-statements
Under IFRS (IAS 16), a company may choose to account for a building using the 'Revaluation Model.'
If the building's fair value increases above its original cost, where is the increase typically recorded?
- In Retained Earnings as a prior-period adjustment.
- In Other Comprehensive Income (OCI) as a Revaluation Surplus.
- It is not recorded; IFRS only allows writing assets down, never up.
- Directly in Net Income as a 'Gain on Revaluation'.
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