Accounting · Accounting Standards
Which specific accounting treatment is required when a bank decides to revalue its office premises to reflect current market prices under the Revaluation Model as permitted by Accounting Standard 10 / Ind AS 16, and how does this affect subsequent depreciation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The entire revaluation surplus must be credited directly to Profit and Loss as an extraordinary gain, and depreciation continues on historical cost.
- 2The revaluation surplus is credited to Revaluation Reserve, and depreciation is calculated on the revalued amount with optional transfer of excess depreciation to retained earnings.✓
- 3Revaluation is strictly prohibited for banking companies under RBI guidelines, and assets must always be carried at cost less depreciation.
- 4The increase in value is ignored for depreciation, but subsequent decreases must be debited directly to the Statutory Reserve.
Correct answer
The revaluation surplus is credited to Revaluation Reserve, and depreciation is calculated on the revalued amount with optional transfer of excess depreciation to retained earnings.
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