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:

Finance Leases

Leasing agreements that transfer substantially all risks and rewards of ownership of the asset from the lessor to the lessee.

Contractual Agreement

A legally binding contract specifying the terms and conditions under which parties agree to perform certain actions.

Note Principal

The original amount of money borrowed or the amount still owed on a loan, separate from interest.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as a percentage of the principal.