ABC is a UK corporation that followsIFRS. ABC  purchased a new machine for 3,500,000pound sterling at the beginning of the fiscal year ended 31 March 2014. As of31 March 2014, the machine has a fair value of GBP 4,000,000. Should ABC show aprofit for the revaluation of the machine if it uses the revaluation model forits property, plant and equipment?
　　A.       Yes.
　　B.       No, because thisrevaluation is recorded directly in equity.
　　C.       No, becausevalue increases resulting from revaluation can never be recognized as a profit.
　　CorrectAnswer: B.
　　Inthis case, the value increase brought about by the revaluation should berecorded directly in equity. The reason is that under IFRS, an increase invalue brought about by a revaluation can only be recognized as a profit to theextent that it reverses a revaluation decrease of the same asset previously recognizedin the income statement.
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