Under IAS 16 when an asset is revalued and the gross method is used,accumulated depreciation:
A)must be written back to profit.
B)must be closed off to reduce the asset account.
C)is ignored during revaluation as it has not effect on carrying amount.
D)should be increased by the same proportion as the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals the revalued amount.

Question

Quizplus · Accepted Answer

When an asset is revalued under IAS 16 using the gross method, the carrying amount is increased to the revalued amount by the same proportion as the gross carrying amount. This means that the accumulated depreciation is also increased by the same proportion to maintain the relationship between the gross carrying amount and accumulated depreciation. Therefore, option D is the correct choice.

Under IAS 16 When an Asset Is Revalued and the Gross