Grover Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | }
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 160,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 120,000 \
\hline
\end{array}$$ The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, what amount would be booked to profit and loss if Grover chooses to use the elimination method to record the revaluation?
A)$0
B)$20,000 credit.
C)$20,000 debit.
D)$30,000 credit.

Question

Grover Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 160,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 120,000 \
\hline
\end{array}$$ The fair value for the property is $140,000. Assuming this is the first year of using the revaluation model, what amount would be booked to profit and loss if Grover chooses to use the elimination method to record the revaluation?
A)$0
B)$20,000 credit.
C)$20,000 debit.
D)$30,000 credit.

Quizplus · Accepted Answer

Under the revaluation model, when an asset's carrying amount is increased due to a revaluation, the increase is recognized in other comprehensive income and accumulated in equity under revaluation surplus, not in profit or loss, unless it reverses a revaluation decrease of the same asset previously recognized in profit or loss. Since this is the first revaluation and it results in an increase in the asset's value, there is no impact on profit and loss.

Grover Inc Wishes to Use the Revaluation Model for This