What is the double-entry when an asset is revalued upwards?

What is the double-entry when an asset is revalued upwards?

• A. Dr Asset; Cr Revaluation Reserve
• B. Dr Revaluation Reserve; Cr Asset
• C. Dr Asset; Cr Cash
• D. Dr Income; Cr Asset

Answer: (A)

When a non-current asset is revalued upwards, its carrying amount increases to reflect the new fair value. The accounting treatment is to raise the asset’s value (debit the asset) and create a corresponding capital reserve in equity to show the surplus over the asset’s previous carrying amount (credit to Revaluation Reserve). This keeps the balance sheet aligned with the asset’s true value while preserving the surplus within owners’ funds rather than recognising it as income. Depreciation going forward is then charged on the new, higher carrying amount. The other options would either move value to cash, recognise income, or reverse the asset value inappropriately, which isn’t how upward revaluations are recorded.

When a non-current asset is revalued upwards, its carrying amount increases to reflect the new fair value. The accounting treatment is to raise the asset’s value (debit the asset) and create a corresponding capital reserve in equity to show the surplus over the asset’s previous carrying amount (credit to Revaluation Reserve). This keeps the balance sheet aligned with the asset’s true value while preserving the surplus within owners’ funds rather than recognising it as income. Depreciation going forward is then charged on the new, higher carrying amount. The other options would either move value to cash, recognise income, or reverse the asset value inappropriately, which isn’t how upward revaluations are recorded.