IAS 16 Property, Plant and Equipment sets out the requirements for the recognition, measurement and disclosures in respect of tangible non-current assets: property, plant and equipment. In particular, the standard allows a choice of measurement base between historical cost and revalued amount and sets out the measurement rules in each case.

(a) Describe the main measurement requirements of IAS 16 in respect of the revaluation model and theconditions for its use by an entity.

(b) Detail how surpluses and deficits on revaluation should be recognised in the financial statements.

(c)

The following transactions and issues occurred in relation to the Property, Plant & Equipment of Red Ravens Ltd during the period 1/1/2014 to 31/12/2020:

1/1/2014 Purchased machine for N$2,000,000

Depreciation charged at rate of 10% per annum with residual value of N$400,000.

Purchased building for N$6,000,000

Depreciation charged at rate of 2.5% per annum with residual value of nil.

1/1/2017 Revalued machine to N$1,700,000

Remaining useful life is now 4 years with a residual value of N$500,000.

Revalued building to N$8,000,000

Remaining useful life is now 40 years.

1/1/2020 Revalued machine to N$600,000

Remaining useful life is now 2 years with a residual value of N$200,000.

31/12/2020 Sold Building for N$9,000,000

Assume a full years depreciation is charged in year of acquisition and none in year of disposal. The company does not make a reserve transfer in relation todepreciation on revaluation surpluses.

REQUIREMENT:

Show the relevant extracts from the SPLOCI and SFP of Red Ravens Ltd for the financial years ending 31 December 2014, 2017, and 2020.