Purple Co Ltd Purchased an Item of Land 3 Years

Multiple Choice

Purple Co Ltd 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.