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      Question

      A company revalues its PPE upward to reflect fair value.

      Where should the resulting increase be recorded in financial statements?
      A P&L Correct Answer Incorrect Answer
      B Revenue Correct Answer Incorrect Answer
      C Equity reserve Correct Answer Incorrect Answer
      D Deferred income Correct Answer Incorrect Answer
      E Liability Correct Answer Incorrect Answer

      Solution

      Under IAS 16, an upward revaluation does not represent realized income.Therefore, it is credited to Revaluation Surplus (under Equity / OCI) and bypasses Profit & Loss to avoid inflating profits with unrealized gains.

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