Wilson Inc wishes to use the revaluation model for this property: The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, which of the following amounts will be booked?
A)$60,000 debit to profit and loss
B)$60,000 credit to profit and loss
C)$60,000 debit to OCI
D)$60,000 credit to OCI

Question

Wilson Inc wishes to use the revaluation model for this property:  The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, which of the following amounts will be booked?
A)$60,000 debit to profit and loss 
B)$60,000 credit to profit and loss 
C)$60,000 debit to OCI 
D)$60,000 credit to OCI

Quizplus · Accepted Answer

When using the revaluation model, any increase in value of the asset is recorded as a credit to other comprehensive income (OCI) and not as profit and loss. Therefore, $140,000 fair value less the previous carrying amount of $80,000 equals an increase in value of $60,000 which is recorded as a credit to OCI.

Wilson Inc Wishes to Use the Revaluation Model for This