IFRS
IFRS (international financial reporting standards) is the principles-based accounting framework used by listed companies across Europe and most of the world. It sets how European students meet nearly every financial statement they read.
What it is
See it move
A factory is carried at €200,000 under the cost model. An independent valuer assesses its fair value at €260,000, a gain of €260,000 − €200,000 = €60,000. Under IFRS's revaluation model, that gain is not profit; it goes to other comprehensive income and sits in a revaluation surplus within equity, because it is unrealised.
Check yourself
A logistics company carries a warehouse at €340,000 under the cost model. It elects to apply the revaluation model permitted under IFRS, and an independent valuer assesses the warehouse's fair value at €410,000. What is the effect of the revaluation, and where does the resulting amount appear?