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What is a Revaluation?

Definition: An increase in an asset's value in order to reflect the current market value of the asset.
The values of all of a firm's assets must be recognized and documented in their accounts. The initial values of these assets are taken from their current market values. Some assets fluctuate over time due to changes in market value. When an asset increases in value, a revaluation is necessary. If the asset were to decrease in value, then an impairment would be necessary.

Revaluation is the positive difference between an asset's fair market value and its original cost, minus depreciation. Revaluations are recognized in a firm's equity and do not affect the income statement.

Which assets are revalued?

Different rules exist about which assets may be revalued, so you should probably consult with an accountant or other professional to find out for sure.

 

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