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IAS 16, Property, Plant and Equipment allows companies to choose either the cost model or the...

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Accounting

IAS 16, Property, Plant and Equipment allows companies to chooseeither the cost model or the revaluation model to measure thecarrying amount of property, plant and equipment subsequent to itsinitial recognition as an asset.

Discuss how you should account for revaluation gains and losseswhen the valuation model is used. In addition, explain how thereversals of the revaluation gains and losses should bereported.

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IAS 16Property plant and equipment overview There are essentially four key areas when accounting for property plant and equipment that you must ensure that you are familiar with Initial recognition Depreciation Revaluation Derecognitiondisposal Here we are going to discuss about the topic revaluation IAS 16 permits the choice of two possible treatment in respect of propertyplant and equipment The cost model carry an asset at cost less accumulated depreciationimpairments The revaluation model carry an asset at its fair value at the revaluation date less subsequent accumulated depreciation impairment If the revaluation policy is adopted this should be applied to all assets in the entire categoryIe of you revalue a building you must revalue all land and buildings in that class of assets Revaluations must also be carried out with sufficient regularity    See Answer
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