Question

What do you know about the revaluation of​ assets? Fill in the blanks from the​ drop-down choices to help you understand this topic.

Once assets are

▼

fair value

carrying amount

revaluation

current values

revalued

historic cost

​, the frequency of

▼

current values

revalued

revaluation

historic cost

fair value

carrying amount

then becomes an important issue as assets recorded at​ out-of-date values can mislead users. Using​ out-of-date revaluations on the statement of financial position is problematic. It lacks the objectivity and verifiability of

▼

revalued

historic cost

carrying amount

current values

revaluation

fair value

​; it also lacks the realism of

▼

fair value

carrying amount

historic cost

revalued

revaluation

current values

. Revaluations should therefore be frequent enough to ensure that the net book​ value, or

▼

historic cost

fair value

carrying amount

revaluation

revalued

current values

​, of the revalued asset does not differ materially from its

▼

revalued

revaluation

historic cost

current values

carrying amount

fair value

at the statement of financial position date.

Answer 1

Once assets are revalued, the frequency of revaluation then becomes an important issue as assets recorded at out­of­date revaluations can mislead users. Using out of date revaluations on statements of financial position is problematic. It lacks the objectivity and verifiability of historic cost; it also lacks the realism of current values. Revaluations should therefore be frequent enough to ensure that the net book value or carrying amoun of the revalued asset does not differ materially from its fair value at the statement of financial position date.