Question

When is revaluation surplus transferred to Retained Earnings?

Option 1: Upon the initial revaluation up and subsequent revaluation down.
Option 2: At the initial revaluation down and subsequent revaluation up.
Option 3: After the initial revaluation down and subsequent revaluation down.
Option 4: After the initial revaluation up and subsequent revaluation down.

Answer 1

The revaluation surplus is transferred to Retained Earnings after the initial revaluation up and subsequent revaluation down.

Step-by-step explanation:

The revaluation surplus is transferred to Retained Earnings Option 4: After the initial revaluation up and subsequent revaluation down. When there is an initial revaluation up, the surplus is credited to the revaluation surplus account. If there is a subsequent revaluation down, the surplus is transferred from the revaluation surplus account to Retained Earnings. This allows for the recognition of the decrease in value and ensures that the surplus is properly accounted for in the financial statements.