Chapter 1
Recognition and Measurement
20
AP-12A (
6
)
Madger Solutions, a manufacturer of micro-processors, has machinery that is used to produce
complex electronic components for its products. The company is publicly traded and uses
the revaluation model under IFRS to account for the equipment. At year-end, the equipment
had a fair market value of $380,000. The amount at which equipment is recorded on the
books before revaluation is $400,000 with an accumulated depreciation of $40,000. Prepare
a calculation showing the amount of gain or loss to be recorded at the end of this fiscal year
under the revaluation model.
Analysis
Identify some drawbacks to using the revaluation method to record the value of non-current
assets.
