When Using the Revaluation Model of Accounting for PP&E Assets

question 22

Multiple Choice

When using the revaluation model of accounting for PP&E assets (proportionate method) ,

• A) a Revaluation Surplus account is not used.
• B) depreciation continues to be charged in the original pattern.
• C) the asset account and its related contra-asset are both adjusted.
• D) over the life of the asset, it is possible that there can be a net increase in net income from revaluations.

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Definitions:

Convertible Bond

A type of bond issued by corporations that can be converted into a predetermined number of shares of the issuing company's stock at certain times during the bond's life, usually at the discretion of the bondholder.

Interest Payment

The payment made to a lender by a borrower for the privilege of borrowing money, typically part of the return on a loan or bond.

Cash Dividend

A payment made by a company out of its profits to shareholders, usually in the form of cash.

Interest Paid

The total amount of interest expenses a borrower has paid over a certain period to lenders for the use of borrowed funds.