Fixed assets can be accounted for using either the cost model or the revaluation model, as per IAS 16 (IFRS) and similar accounting standards. The key differences are:

Basis of Measurement:

Cost Model: Fixed assets are carried at their historical cost less accumulated depreciation and impairment losses.

Revaluation Model: Assets are periodically revalued to their fair market value, with subsequent depreciation applied to the revalued amount.

Impact on Financial Statements:

Under the cost model, the book value decreases systematically due to depreciation, with no upward adjustments.

The revaluation model allows assets to reflect current market values, increasing equity (via revaluation surplus) if values rise, but also introducing volatility.

Frequency of Reassessment:

The cost model does not require revaluation; changes occur only through depreciation or impairment.

The revaluation model requires regular fair value assessments, especially for volatile assets like real estate.

Accounting Treatment of Gains/Losses:

Revaluation increases are credited to a revaluation surplus (equity), while decreases are first offset against prior surpluses, then charged to profit or loss.

Under the cost model, only impairment losses affect the income statement.

Conclusion
The cost model is simpler and more stable, while the revaluation model provides more relevant asset values but requires frequent appraisals and can impact equity and earnings unpredictably. Companies must choose based on industry practices and reporting requirements.