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That is such a good question! Let’s assume we’re talking about property (as plant and equipment is rarely revalued).
The first time revaluation of one or more properties (i.e. up until then the cost model has been applied) is a change in accounting policy. This must be accounted for in accordance with IAS 16 (i.e. not in accordance with the general rule in IAS 8 that changes in accounting policy should be accounted for retrospectively).
Under IAS 16, the revaluation model calls for revaluations to be made with sufficient regularity to ensure that carrying amount does not differ materially from fair value. (You can’t revalue assets in the first place in the absence of a reliable measure of fair value.)
So subsequent revaluation is not the same as a change in accounting estimate – by definition an accounting estimate is made for things that, because of their nature, cannot be measured with precision.Accounting estimates include allowances for irrecoverable debts and inventory obsolescence and provisions for warranties – changes in these estimates are recognised in profit or loss.
When an asset is revalued any surplus is recognised in OCI and accumulated in equity. (Only an impairment loss that exceeds an accumulated surplus would be recognised in profit or loss.)
But what if I say because of the volatility of property’s fair value, it is subject to change (cannot be measured with precision). Also I assume that there will be revaluation decrease (impairment loss) for a continuous period and the property do not have any accumulated surplus before. Therefore the accounting treatment will be debit in SPL and credit in Asset Value in current and future years. Therefore, from this scenario is it a change in estimate?
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