Chien Bleu Ltd.purchased a building in 2004 for €10,000,000 and as of December 31,2010 had recorded accumulated depreciation on the building of €3,000,000. December 31,2010 the company conducted its first revaluation when the fair value was €12,000,000. According to IAS 16,what account should be credited for €5,000,000?
A)retained earnings
B)gain from revaluation of building
C)revaluation surplus
D)revaluation revenue

Question

Quizplus · Accepted Answer

According to IAS 16, the increase in the value of the building should be credited to the revaluation surplus account, which is a component of equity. Therefore, the correct choice is C, revaluation surplus. The other choices do not accurately represent the accounting treatment required by IAS 16.