ABC adheres to IFRS and applies the revaluation model to account for its Patents. Prior to 2009, there was no balance in the company's Revaluation Surplus (OCI) accounts relating to its long-lived assets. The following year-end data refers to the company's patents:
(the table values are in 000's):
$\begin{array} { | l | l | l | }
\hline & \text { Carrying Value } & \text { Fair Value } \
\hline 2009 & \$ 170 & \$ 120 \
\hline 2010 & \$ 160 & \$ 125 \
\hline 2011 & \$ 150 & \$ 130 \
\hline
\end{array}$

-The 2009 revaluation journal entry would include

Question

ABC adheres to IFRS and applies the revaluation model to account for its Patents. Prior to 2009, there was no balance in the company's Revaluation Surplus (OCI) accounts relating to its long-lived assets. The following year-end data refers to the company's patents:
(the table values are in 000's):
$\begin{array} { | l | l | l | } 
\hline & \text { Carrying Value } & \text { Fair Value } \
\hline 2009 & \$ 170 & \$ 120 \
\hline 2010 & \$ 160 & \$ 125 \
\hline 2011 & \$ 150 & \$ 130 \
\hline
\end{array}$

-The 2009 revaluation journal entry would include

Quizplus · Accepted Answer

In 2009, the fair value of the patents is $120,000, which is $50,000 less than the carrying value of $170,000. According to IFRS, a decrease in the carrying amount of an asset due to revaluation should be recognized in profit or loss. Therefore, a $50,000 loss should be recognized on the income statement.

ABC Adheres to IFRS and Applies the Revaluation Model to Account