Page 172 - F1 Integrated Workbook STUDENT 2018

Chapter 10

Revaluations

As discussed previously in the chapter, IAS 16 Property, Plant and Equipment,
allows the treatment of assets to be shown at their revalued amount less
accumulated depreciation and accumulated impairment losses.

The revalued amount of an asset is the asset’s fair value at the date of revaluation.

IFRS 13 Fair Value Measurement, published in May 2011 and applicable for
accounting periods commencing from 1 January 2013, sets out a single framework
for measuring fair value. IFRS 13 defines fair value as 'the price that would be
received to sell an asset or transfer a liability in an orderly transaction between
market participants at the measurement date' (IFRS 13, B2).

IAS 16 Property, Plant and Equipment states that if choosing to revalue, an entity:

 must revalue all assets in the same class (to avoid manipulation)

 must revalue regularly (to avoid manipulation).

If an asset is revalued, any accumulated depreciation at the date of the revaluation
should be written off to the revaluation reserve. Depreciation will then be calculated
based on the revalued amount.

Revaluations must be carried out by a professionally qualified valuer.

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