Explanation:

Under IFRS, impairment losses can be reversed, but only up to the original carrying amount before the impairment. In this case:

1. The historical cost was €50,000.
2. After impairment in Year 1, the carrying value was reduced to €40,000.
3. In Year 2, the recoverable amount increased to €60,000.

However, IFRS does not allow the carrying amount to exceed the original historical cost (€50,000) after a reversal. Therefore, the maximum allowable carrying amount on the Year 2 balance sheet is €50,000 (Option B).

Option A is incorrect because it ignores the possibility of a reversal under IFRS. Option C is incorrect because IFRS prohibits revaluing the asset beyond its original carrying amount, even if the recoverable amount is higher.