A non-current asset is revalued downward for the first time, with no previous revaluation surplus for that asset. Where is the decrease normally recognized?
Correct answer: A. In profit or loss for the reporting period
- A. In profit or loss for the reporting period
- B. In share capital as a reduction of issued capital
- C. In revenue as an increase in operating income
- D. In inventory as part of the production cost
Explanation
A downward revaluation is normally recognized in profit or loss when no earlier surplus exists for the same asset. A revaluation surplus can change the treatment when a previous upward revaluation has been recorded.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
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