In relation to an asset revaluation surplus,an entity:
A)is not able to use this surplus for the payment of future dividends
B)is able to use this surplus for the payment of future dividends
C)is not able to transfer this surplus to any other reserve account
D)can transfer the surplus to the current period profit or loss when the asset is disposed of.

Question

Quizplus · Accepted Answer

An asset revaluation surplus is a reserve account created when an entity revalues its assets at fair value. This surplus is not distributable as dividends, but an entity can use it to offset future losses on the same asset or to increase the carrying value of related assets. Therefore, choice B is the correct answer.

In Relation to an Asset Revaluation Surplus,an Entity