Final answer:
Under IFRS, the excess of the fair value of property, plant, and equipment over its book value is reported as a revaluation surplus in the equity section of the balance sheet.
Step-by-step explanation:
Under IFRS, if the revaluation option is chosen for property, plant, and equipment, the excess of the fair value over its book value is reported as a revaluation surplus.
This revaluation surplus is recorded in the equity section of the balance sheet, specifically as part of the owner's equity or shareholders' equity. It represents the amount by which the assets' fair value exceeds their historical cost.
For example, if a company's property, plant, and equipment have a book value of $1 million but their fair value is determined to be $1.5 million, the $500,000 difference is reported as a revaluation surplus.