Synergy Ltd. purchased a building in 2008 for €20,000,000 and as of December 31, 2014 had recorded accumulated depreciation on the building of €6,000,000. On December 31, 2014, the company conducted its first revaluation when the fair value was €24,000,000. Under IAS 16, the journal entry recorded on this date would include:

Question

Quizplus · Accepted Answer

The revaluation model under IAS 16 allows for an increase in the carrying amount of an asset to be credited to equity under the heading of revaluation surplus, provided it is an increase through revaluation. In this case, the carrying amount after depreciation is €14,000,000 (€20,000,000 purchase price - €6,000,000 accumulated depreciation). The revaluation increases the carrying amount to the fair value of €24,000,000, resulting in a €10,000,000 increase, which is credited to Revaluation Surplus-Building.