Answer: decrease.

## Explanation When a company performs an upward revaluation of an asset under the revaluation model: 1. **Asset value increases**: The carrying amount of the asset on the balance sheet increases 2. **Total assets increase**: This increases the denominator in the debt-to-assets ratio 3. **Debt remains unchanged**: The numerator (total debt) stays the same since this is just an accounting revaluation, not a financing transaction 4. **Ratio calculation**: Debt-to-assets ratio = Total Debt / Total Assets Since the denominator (Total Assets) increases while the numerator (Total Debt) remains constant, the ratio **decreases**. **Mathematically**: - Original ratio: D/A - After revaluation: D/(A + ΔA) where ΔA > 0 - Therefore: D/(A + ΔA) < D/A This is a fundamental concept in financial statement analysis where accounting policy choices can affect financial ratios without changing the underlying economic reality.

Author: LeetQuiz .