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When is rhe right time to use the revaluation model and cost model?
according to my understanding-
When we initail recognise an asset we valve it on cost model
and if any subsequent expenditure we will capitalise it if it fulfils certain conditionsMy first doubt is-
But later on when is right time to revalve the asset??and 2nd doubt is-
Kaplan f1 also mentions same classes od asset should follow same model of valuations ie use the cost model for P&M and revaluation model for Land and buiding.
Now what if the land is bought just in the same year? Shouldnt we valve it on cost. Even when the other land which we already purchased is being valved on revalutation model.Hi,
The choice of cost versus revaluation is an accounting policy choice and we choose the policy for each individual class of asset. Usually, land and buildings are held under the revaluation model and the rest (plant and machinery, motor vehicles) are held under the cost model.
The land and buildings would then be subsequently revalued when the revalued amount is materially different from its current carrying amount.
Thanks
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