Which Statement Relating to Revaluations of Non-Current Assets Is Incorrect

question 34

Multiple Choice

Which statement relating to revaluations of non-current assets is incorrect?

• A) A revaluation decrease should be included as a reduction in profit.
• B) A revaluation increase is regarded as income to be added to the firm's profit for the year.
• C) Future depreciation charges will be based on the revalued carrying amount of the asset.
• D) Before assets are revalued any existing accumulated depreciation must be written off against the asset account.

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Definitions:

Cash Payback Period

The length of time it takes for an investment or project to generate enough cash flows to recover its initial cost.

Present Value Factor

The present value factor is a factor used to calculate the present value of a future amount, considering a specific interest rate over a set period.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Net Income

The total profit of a company after all revenues, gains, expenses, and losses have been accounted for.