10. The frequency of revaluation therefore depends on the volatility of the fair value of an asset.

　　11. When an item of property, plant and equipment is revalued, the entire class of property, plant and equipment to which that asset belongs should be revalued.

　　12. Following revaluation, the depreciation charge should be based on the revalued amount.

　　13.It follows that the effects of revaluation include an increase in the depreciation charge and a decrease in reported earnings and EPS. Note, however, that revaluation has no effect on the maximum amount of profits that an entity may legally distribute.

　　14.On the disposal of a revalued asset, the gain on disposal will consist of two elements:

　　①Sales proceeds less the carrying amount on the date of sale, and

　　②The revaluation surplus on the date of revaluation

　　15.The revaluation surplus part of the gain may be transferred to retained earnings when the surplus is realized.

　　16.Note that the revaluation reserve becomes realized in two ways.

　　17.It becomes realized, first, through use of the revalued asset. The amount of the surplus that becomes realized in this way is the amount of the additional depreciation charged since revaluation i.e. the excess of the depreciation charged on the revalued amount compared with the depreciation that would have been charged on the basis of historical cost.

　　18.It becomes realized, second, on sale of the asset to the extent of the amount remaining in the revaluation reserve in respect of the sold revalued asset.

　　19.The realized amount of a revaluation reserve should not be taken direct into the income statement for any one year.