Thinkican Ltd is a company that has always measured its plant at cost less accumulated depreciation

 
   

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Thinkican Ltd is a company that has always measured its plant at cost less accumulated depreciation and impairment losses. The directors now wish to measure the plant at fair value less subsequent accumulated depreciation and impairment losses. Revaluing plant to fair value will result in a substantial increase in its carrying amount. Although the accountant knows that the increase in value is debited to plant, he is of the opinion that the increase in value should be recognised as income.

Required:

Discuss whether the accountant’s proposed treatment is correct. Your answer should be based on the relevant definitions provided in the Framework.