A revaluation surplus is a reserve account that arises when:
A) an entity uses fair value rather than cost to measure its long-term assets.
B) an entity uses cost rather than fair value to measure its long-term assets.
C) management transfer funds out of retained earnings to put aside for future use.
D) an entity has an overseas subsidiary.

Question

Quizplus · Accepted Answer

A revaluation surplus is created when an entity chooses to measure its long-term assets at fair value instead of cost. If the fair value of the asset exceeds the carrying value, the difference is recorded as a revaluation surplus within equity.

A Revaluation Surplus Is a Reserve Account That Arises When