Purple Co Plc Purchased an Item of Land 3 Years

Multiple Choice

Purple Co Plc purchased an item of land 3 years ago at a cost of £700 000.Two years ago the recoverable value of the land was considered to be £550 000.In the current period the land is revalued and the fair value is now £750 000.What is the treatment of the change in value in each of the periods?

A) Two years ago: a loss of £150 000 is recognised.The current period: a gain of £150 000 and an increase in the asset revaluation reserve of £50 000 is recognised.
B) Two years ago: £150 000 is debited to the asset revaluation reserve.The current period: £200 000 is credited to the asset revaluation reserve.
C) Two years ago: £150 000 is expensed in the period.The current period: £200 000 is transferred to the asset revaluation reserve.
D) Two years ago: £150 000 is written off to the asset revaluation reserve.The current period: £200 000 revenue is recognised.