The Revaluation Reserve relates to which type of asset changes?

• A. Changes in current assets only
• B. Revaluations of non-current assets
• C. Changes in share capital
• D. Revenue profits

Answer: (B)

The Revaluation Reserve is created when a non-current asset is measured at a new, higher value under the revaluation model. When the asset’s carrying amount increases due to a revaluation, the rise is recorded in this reserve within equity. It represents the accumulated surplus on non-current asset values and is not connected to current assets, share capital, or profits from day-to-day operations. This is specific to non-current assets like property, plant and equipment (and certain intangible assets); it does not apply to revenue profits or changes in share capital. If a later revaluation reduces the asset’s value, that decrease generally goes through the profit and loss account (or can reduce the Revaluation Reserve for that asset if there is an existing surplus).