Chien Bleu Ltd. purchased a building in 2009 for €10,000,000 and as of December 31, 2015 had, recorded accumulated depreciation on the building of €3,000,000. On December 31, 2015, the company conducted its first revaluation when the fair value was €12,000,000. According to IAS 16, what account should be credited for €5,000,000?

Question

Quizplus · Accepted Answer

According to IAS 16, any increase in the value of the revalued asset above its carrying amount should be credited to a separate component of equity called "Revaluation Surplus." In this case, the fair value of the building is €12,000,000, which is €2,000,000 more than its carrying amount of €10,000,000 after deducting accumulated depreciation of €3,000,000. Therefore, €2,000,000 should be credited to Revaluation Surplus-Building.