ABC is a UK corporation that followsIFRS. ABC  purchased a new machine for 3,500,000pound sterling at the beginning of the fiscal year ended 31 March 2014. As of31 March 2014, the machine has a fair value of GBP 4,000,000. Should ABC show aprofit for the r*uation of the machine if it uses the r*uation model forits property, plant and equipment?
　　A.       Yes.
　　B.       No, because thisr*uation is recorded directly in equity.
　　C.       No, becaus*ue increases resulting from r*uation can never be recognized as a profit.
　　CorrectAnswer: B.
　　Inthis case, the value increase brought about by the r*uation should berecorded directly in equity. The reason is that under IFRS, an increase invalue brought about by a r*uation can only be recognized as a profit to theextent that it reverses a r*uation decrease of the same asset previously recognizedin the income statement.