CERTYNEX IFRS ACADEMY

After an internal process lasting several months, Pescarel has obtained a freely transferable production quota, traded in an active market. The expenditure incurred before the recognition criteria were met (30,000) was recognised as an expense; only the expenditure incurred afterwards (50,000) forms the cost of the asset. Pescarel applies the revaluation model to this class of assets. At the reporting date, the market price of the quota is 140,000. What may Pescarel do?

Nothing: an internally generated asset can never be revalued, as it has no acquisition cost.

Revalue the asset, but cap its revalued amount at 50,000, the amount of expenditure recognised as an asset.

Revalue the whole asset at its fair value of 140,000, determined by reference to the active market.

First reinstate as an asset the 30,000 expensed, then revalue the quota from a rebuilt cost of 80,000.