Reference no: EM132634756

1. IAS 16, states that the entities must determine the fair value of the asset at each reporting date if they use the revaluation model.

2. When a class of property, plant and equipment is measured under the revaluation model the entity will also need to disclose the carrying amount of that class of assets measured using the cost model.

3. When applying the revaluation model, any increase in the carrying amount will be credited to the revaluation surplus account, and since this account is presented in other comprehensive income, the upward revaluation will not affect profit or loss.

4. The revaluation surplus balance, which is included in equity, must transferred to retained earnings upon disposal of the asset.

5. Land must always be subsequently measured using the revaluation model.

6. An entity using the cost model is allowed to change to the revaluation model.

REQUIRED:

Question 1: Marks State in each case whether the statement is TRUE (if it is 100% true) or FALSE. If a statement is false, explain why that is the case