Which transaction reflects a gain or loss when revaluing an asset under IAS 16?

When revaluing an asset under IAS 16, the gain or loss is recognized immediately in other comprehensive income and credited or debited to a revaluation surplus within equity. This principle allows for the adjustment of the asset's carrying value on the balance sheet to reflect its fair value at the date of revaluation. If the asset's revalued amount exceeds its carrying amount, a revaluation surplus is created, and if it falls below, it may result in a loss recognized in profit or loss.

This method is designed to provide more relevant information about the value of assets on the balance sheet, ensuring that users of financial statements have up-to-date and accurate figures that reflect current market conditions. Therefore, the recognition of a gain or loss occurs as soon as the revaluation takes place, rather than waiting for a sale or subsequent reporting periods. In this way, financial statements can provide a true and fair view of the entity's financial position.