Greetings If an asset is revalued upwards, (correct me if wrong) we: i. use the new figure, ii. scrap the previous accumulated depreciation charges (and calculate out the new charge if necessary), iii. enter the difference between new value and the net asset value (cost less total depreciation) as a positive revaluation reserve on the capital section of the balance sheet. What happens if an asset is revalued down, ie its new value is less then the current net asset value? Can we enter negative revaluation reserves? Thanks
Hi Revaluation upwards is done as you describe. Revaluation downwards isn't covered by the Core Reading as far as I can recall. However, we can't have a negative revaluation reserve. Instead, a downwards revaluation is shown as an expense (ie a loss) in the income statement. Best wishes Lynn
