CERTYNEX IFRS ACADEMY

Taxelis applies the revaluation model to its taxi licences, which are freely transferable and traded in an active market. It sells one of them; at the disposal date, the revaluation surplus in equity relating to this licence amounts to 70,000. Under its accounting policy, Taxelis transfers the whole revaluation surplus when the asset is disposed of. Deferred tax is ignored. How are these 70,000 accounted for?

They are reclassified to profit or loss, where they are added to the gain on disposal of the licence for the period.

They are transferred directly to retained earnings, without passing through profit or loss.

They remain in the revaluation surplus until the company is wound up, because a revaluation surplus is never realised.

They are recognised as a decrease in other comprehensive income for the period, against the result on disposal.