FRA Question from CFAI book 468, increase, because, someone

cyber21

CFAI FRA book, page 468, #23
Can someone explain why the answer is B?
My thought is that if an asset is revalued upward, that would increase financial leverage because the numerator (assets) would increase.

kd26gioi

greater equity making A wrong…sorry just figured out how to edit posts

kim226

equity is going up (keeping assets equal to liabilities) and debt is staying the same. retained earnings increase through the write up realized in the income statement.