Revaluation
Carrying a long-lived asset at a current value rather than depreciated cost, where the standards allow it. Gains go to equity, not to profit.
Where you will meet it
Revaluation appears in 2 learning outcomes on the CFA syllabus. A few of them:
- Explain the revaluation model and how assets are derecognised
“An increase is normally recognised in other comprehensive income and accumulated in a revaluation surplus, except to the extent it reverses a previous decrease charged to income, in which case it goes to income.”
- Explain why valuation comparisons across borders can differ
“IFRS and US GAAP differ in areas such as inventory methods, capitalisation of development costs and revaluation of assets, which affect earnings and book value.”
Practise it
Practise revaluation until it is automatic: questions that explain every wrong option.
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