How is fair value assessed in the revaluation model for PPE?

Using the revaluation model for Property, Plant, and Equipment (PPE), the fair value is assessed as the estimated market price at the time of revaluation, taking into account any accumulated depreciation and impairment losses. This approach reflects the true economic value of the asset as it accounts for any reduction in value that may have occurred since the asset was initially acquired or previously revalued.

In this context, the asset’s fair value represents the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date. By considering accumulated depreciation and impairment losses, the assessment ensures that the carrying value of the asset accurately represents its current worth in light of wear and tear, technological obsolescence, and changes in market conditions.

This aligns with the framework established by accounting standards, which emphasize the importance of recognizing and measuring assets at amounts that reflect their fair value in the current market environment. Thus, option C accurately captures the process involved in determining fair value under the revaluation model, distinguishing it from assessments based on cost or other less relevant measures.