From the course: Accounting Foundations: Asset Impairment

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The upward revaluation option under International Financial Reporting Standards (IFRS)

The upward revaluation option under International Financial Reporting Standards (IFRS)

From the course: Accounting Foundations: Asset Impairment

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The upward revaluation option under International Financial Reporting Standards (IFRS)

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- Under current U.S. accounting rules, companies are not allowed to increase the recorded amount of long-term operating assets when those assets increase in value after being purchased. So if you buy land for $500,000, the land can never be recorded in your books for more than $500,000, no matter how much it subsequently increases in value. In contrast, under International Financial Reporting Standards, IFRS, an allowable alternative is to report increases in the value of long-term operating assets. To illustrate, let's say that Astana Company purchased land for $500,000. I'm using land here to keep things simple. I don't want to have to worry about depreciation calculations. Astana Company uses International Financial Reporting Standards, IFRS. That land's fair value is now $600,000 and Astana employs the allowable alternative under international standards, electing to report this $100,000 increase in the value of…

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