The unpopularity of revaluation

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

What is the correct treatment for borrowing costs under IAS 23, Borrowing Costs?

All finance costs must be expensed in relation to financing an asset

Entities can choose to capitalise or expense the finance costs in relation to a qualifying asset

Costs directly attributable to a qualifying asset must be capitalised as the asset is getting ready for use

All costs relating to the financing of an asset must be capitalised

Where must the remeasurement component be recorded in relation to IAS 19, Employee Benefits?

Only a percentage recorded in profit or loss, with the rest in other comprehensive income

All in profit or loss

It does not have to be recognised, just disclosed

All in other comprehensive income

What method is now the required treatment for jointly controlled entities?

Consolidation method

Equity method

Fair value method

Cost model

When can firms apply the revaluation model set out in IAS 38, Intangible Assets?

In any case, but it needs to be done annually

When there is an active market

For research and development only

Never

Which of the following intangible assets could be revalued per IAS 38, Intangible Assets?

An internally generated brand name

None of the other answers is correct

An acquired brand name

Goodwill

Where should a gain on revaluation of PPE be recorded under IAS 16?

Other comprehensive income

Profit or loss

Retained earnings

Revenue

What is one disadvantage of applying the revaluation model?

Reduced disclosure requirements

Elimination of lease accounting

Higher depreciation charges

Lower asset values

Why do companies have little incentive to use the revaluation model?

It is prohibited by IFRS Accounting Standards

It is costly and time consuming, with limited benefits

It can be used only for intangible assets

It reduces revenue recognition

How often should entities revalue assets under the revaluation model?

Annually

Every two years

Regularly enough for the carrying amount not to differ materially from the market value

Every three years

If an entity applies the revaluation model, which of the following rules applies?

None of the other answers is correct

All items in the same class must be revalued

The entity can select the items to be revalued

All property, plant and equipment must be revalued

1 unit