In the revaluation model, how is carrying amount determined?

In the revaluation model, how is carrying amount determined?

• A. Carrying amount is the fair value minus accumulated depreciation and impairment losses
• B. Carrying amount is historical cost
• C. Carrying amount is replacement cost
• D. Carrying amount is net realizable value

Answer: (A)

Under the revaluation model, an asset is carried at its fair value at the date of the latest revaluation, and then reduced by depreciation and any impairment losses that have accrued since that revaluation. So the carrying amount equals the revalued amount (the current fair value) minus accumulated depreciation and impairment losses. This keeps the book value aligned with the asset’s current economic value while reflecting wear and tear and any decreases in recoverable amount. For example, if the revalued amount is 500,000 and accumulated depreciation is 80,000 with impairment losses of 20,000, the carrying amount would be 400,000. The other options describe measurement bases used in different contexts (historical cost, replacement cost, or net realizable value) which do not apply here.

Under the revaluation model, an asset is carried at its fair value at the date of the latest revaluation, and then reduced by depreciation and any impairment losses that have accrued since that revaluation. So the carrying amount equals the revalued amount (the current fair value) minus accumulated depreciation and impairment losses. This keeps the book value aligned with the asset’s current economic value while reflecting wear and tear and any decreases in recoverable amount. For example, if the revalued amount is 500,000 and accumulated depreciation is 80,000 with impairment losses of 20,000, the carrying amount would be 400,000. The other options describe measurement bases used in different contexts (historical cost, replacement cost, or net realizable value) which do not apply here.