Blockware Corporation has selected to use the revaluation model for its assets.Recently it had its building appraised.The appraiser placed a $5.0 M value on the building.Back in 2012 this building was purchased for $4.0M.This increases in value over cost requires a:

Question

Quizplus · Accepted Answer

Since Blockware Corporation has chosen to use the revaluation model, any increase in the fair value of its assets should be credited to the revaluation surplus account. Therefore, the correct answer is to credit the revaluation surplus account (Choice C). This will recognize the increase in the building's value without affecting the book value or accumulated depreciation. It is not correct to credit the building account (Choice B) as this will result in a higher book value, which is not consistent with the revaluation model. The accumulated depreciation account (Choice A) is not relevant in this case as there is no indication that the building has depreciated. Finally, it is not necessary to debit the revaluation surplus account (Choice D) as this will decrease the revaluation surplus and is not consistent with the fact pattern provided.

Blockware Corporation Has Selected to Use the Revaluation Model for Its