What happens to losses from revaluation in the revaluation model?

In the context of the revaluation model under IFRS, when a company revalues its assets, any losses from the revaluation process must be addressed appropriately. When an asset is revalued and it results in a loss, that loss typically offsets any previously recognized revaluation surplus within equity. If there is no prior revaluation surplus to offset, the loss is recognized directly in the profit and loss statement.

This treatment ensures that financial reporting reflects the current value of the asset and provides transparency about the performance of the company, as the losses directly impact the income statement, thereby affecting the overall profit or loss for the period. The adjustment of losses against previously recorded gains in equity highlights the importance of reflecting the true financial position of the company, preventing inflated equity figures that do not align with current asset values.

In contrast, gains and losses must be effectively communicated to stakeholders through the financial statements, as they influence decision-making and investment assessments. Hence, option C accurately reflects the accounting treatment of losses from revaluation by noting that they offset gains and are recorded in profit and loss.