When applying the revaluation model, any increase in the carrying amount will be credited to the revaluation surplus account, and since this account is presented in other comprehensive income, this upward revaluation will not affect profit or loss.

When a class of property, plant and equipment is measured under the revaluation model, the entity will also need to disclose the carrying amount of that class of assets measured using the cost model.

(Indicate whether the above statement is true or false)

Even when using the revaluation model, the asset (PPE) must always be initially measured at its cost. 

When a company adopts the revaluation method in relation to an item of property, plant and equipment, it is no longer necessary to charge depreciation in relation to that item.

Items of property plant and equipment that are measured under the revaluation model, must be revalued to fair value on an annual basis.

A machine is purchased on 1 January 2022 at a cost of N$200 000. Depreciation is provided on a straight-line basis at 20% per annum with a nil residual value.

On 31 December 2023, the asset is revalued to a fair value of N$180 000. Ignore tax.

The journal/s to record the revaluation using the net replacement value model is:

Consider the following statements in relation to IAS 16, Property plant and equipment:

1. The cost model is required to be used for all items of property, plant & equipment.

2. The revaluation model is required to be used for all items of property, plant and equipment.

3. An entity can use the cost model for some properties and the revaluation model for other properties.

4. An entity can use the cost model for its plant and equipment and the revaluation model for its properties.

Sit-on-Top offers bus tours along the Jurassic Coast. It purchased a bus on 2 January 20X4 for N$170 000. The bus has a total estimated useful life of 5 years. At 31 December 20X5, the end of the 20X5 financial year,

• Similar busses that are new are selling for N$175 000;

• Similar busses that are 1 year old are selling for N$100 000;

• Similar busses that are 5 years old are selling for N$40 000;

• Similar busses that are 4 years old are selling for N$65 000.

For purposes of estimating depreciation for the year ended 31 December 20X5, the residual value of the bus is:

There are 2 models to choose from when subsequently measuring property, plant and equipment in terms of IAS 16, namely, the cost model and the fair value model.

(Indicate whether the above statement is true or false)

The requirements of IAS 16 in relation to depreciation include:

1. Depreciation begins when the asset is capable of operating in the manner intended by management.

2. Depreciation begins when the asset is purchased.

3. Depreciation ceases during periods when the asset is idle.

4. Depreciation does not cease during periods when the asset is idle.