Some gains and losses arising on a revaluation of property plant and equipment are to be included in other comprehensive income. When the asset is measured in a foreign currency, how would exchange differences be treated?
A) As an item to be included in income or loss for the year.
B) As a reduction or increase in the carry cost of the asset.
C) As a contra account to be fully disclosed and to show the impact of foreign exchange differences.
D) The differences should be included in the calculation of other comprehensive income.

Question

Quizplus · Accepted Answer

Exchange differences on the revaluation of property plant and equipment measured in a foreign currency should be included in the calculation of other comprehensive income. This is in line with the concept of comprehensive income which includes all gains and losses that affect equity but are not recognized in the income statement. Therefore, the correct treatment is to record the exchange differences in other comprehensive income.

Some Gains and Losses Arising on a Revaluation of Property