Change from revaluation back to cost model
Question
We intend to change our accounting policy on land and building from “Revaluation model” to “Cost model”. IAS 16 is silent on that.
Please, what are your thoughts on this?
Answer
It is not prohibited, but it is very rare. I would say it is possible only when the cost model is more relevant than the revaluation model and you should give a good reason for this change.
The standard IAS 8 paragraph 14 permits the change in accounting policy only when it is required by IFRS or when it is more relevant. Having that said, if fair values of the related items are readily available and determinable, I cannot see how changing back to cost model would be more reliable and relevant.
Tags In
JOIN OUR FREE NEWSLETTER AND GET
report "Top 7 IFRS Mistakes" + free IFRS mini-course
Please check your inbox to confirm your subscription.
Leave a Reply Cancel reply
Recent Comments
- Jelilat on How to Measure Fair Value in Agriculture – IAS 41 and IFRS 13
- ROHAIL on Expected Credit Loss on Intercompany Loans
- Muhammad Anwar on Top 4 Changes in Profit or Loss Statement under IFRS 18 (with video)
- DEBET on How to Account for Compound Financial Instruments (IAS 32)
- Peter on How to account for intercompany loans under IFRS
Categories
- Accounting Policies and Estimates (14)
- Consolidation and Groups (24)
- Current Assets (21)
- Financial Instruments (55)
- Financial Statements (51)
- Foreign Currency (9)
- IFRS Videos (69)
- Insurance (3)
- Most popular (6)
- Non-current Assets (54)
- Other Topics (15)
- Provisions and Other Liabilities (44)
- Revenue Recognition (26)
- Uncategorized (1)