Where the replacement cost of a fixed asset rises year on year there will be a need to increase the accumulated depreciation.This should be offset by a charge to;
A)the P & L account.
B)the holding gain reserve.
C)a prior year adjustment to the P & L.
D)a separate reserve.

Question

Quizplus · Accepted Answer

When the replacement cost of a fixed asset rises, the increase in accumulated depreciation should be offset by a charge to the holding gain reserve, which accounts for the increase in value due to inflation or revaluation.

Where the Replacement Cost of a Fixed Asset Rises Year