How to Revalue an asset
Over the life of an asset some assets can change in value either positively (they are worth more) or go down in value. Your accountant or tax advisor will let you know what to do either way.
As a guide, revaluation might be done for many reasons such as:
- Building improvements ie additions and additional work
- The actual value of the asset going up ie land price increases
- Artwork being appraised at a higher price
- Software projects having additional code being written therefore adding value
Steps to revalue an asset:
- Click into the asset you would like to revalue from the asset register
- Select Revalue in the Focus View (as pictured)
- Enter the Revaluation Date
- Select whether to revalue the accounting schedule, the tax schedule or both.
- Enter the revalue details including the Valuation amount, Depreciation Type, and associated Rate/Term
If you are connected to Xero or QuickBooks Online, you may choose whether you would like the related journals for the revaluation to be posted into your accounting package by ticking or unticking the checkbox at the bottom of the following image. If not connected, then no option will be provided.
- Click Next if Post a journal is ticked
The following image is when Post a journal is ticked providing a confirmation screen
- Review / select which of your accounts to post the journal entries to
- Click Confirm
Accounting Journals for Monthly Averaging organisations:
- If the revaluation occurs in the current month (before monthly depreciation has been posted), there will be no impact on depreciation, as this will be reflected in the end of month depreciation posting.
- If the revaluation date is at a historical date (not within the current month), there will be an asset & surplus/impairment journal and an adjustment journal for the depreciation & accumulated depreciation based on what depreciation & accumulated depreciation has already posted and what should be posted to bring the asset up to date from the revalue date.
Accounting Journals for Daily Averaging organisations:
- If the revaluation occurs in the current month (before monthly depreciation has been posted), there will be depreciation & accumulated depreciation posted up to the revalue date along with updating the asset's current value.
- If the revaluation date is at a historical date (not within the current month), there will be an asset surplus or impairment journal and an adjustment journal for the depreciation & accumulated depreciation based on what depreciation & accumulated depreciation has already posted and what should be posted to bring the asset up to date from the revalue date.
You're all set! Well done!
Remember as always, please seek advice from a qualified professional like your CPA, CA, accountant, tax advisor or certified professional before carrying out a revaluation.
Asset.Guru does not provide any financial advice or tax advice.