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Accounting entries upon revaluation

Accounting entries upon revaluation

I would be grateful if someone could just clarify the necessary accounting entries when adjusting for a revaluation. It is probably best explained by using a illustration, therefore say :

Cost b/fwd £100,000
Dep'n b/fwd £4,000
2% straight line dep'n
Revaluation £250,000

I have so far adjusted as follows :

DR Cost b/fwd £150,000
DR Dep'n b/fwd £4,000
CR Revaluation reserve £154,000

DR P&L dep'n chg £5,000
CR B/S dep'n chg £5,000

Where I am a little unsure is with regards to the how and where I adjust for the difference in depreciation between the cost and revalued amount. Don't I simply transfer the difference from the revaluation reserve to the P&L ??

Please advise in double entry terms.

Thank you.

Paul Dorrington


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By Abacjm
28th Nov 2003 17:25

From what you are saying, the end position you wouyld like is to have the NBV before this year's Depreciation charge showing the Asset revalued to be worth 150k NETT.
If that is the case, you Dr the Asset with 154k and Cr Revaluation Reserve. It does not affect historical Depreciation.
Historical Asset Value - £100,000
Aggregate Dep to date @2% Straight Line over 2 years = £4000
Net Book value = £96,000
You then want the Asset revalued to show its NBV to be 250k, so you will have to add £154k to it, so that the value BEFORE applying this year's depreciation is £250k
Historical Value £100,000
Add revaluation £154,000
New Revalution £254,000

Deprec b/fwd £ 4,000
Net book Value £250,000 (say @ 1/1/03)

current year dep @ 2% straight line
NBV at this year end = £244,920

ie Revalued Asset B/fwd 254,000
Aggregated Dep b/f 4,000
this year Deprec 5,080 (str line)
NBV at end of period 244,920

Therefore Acc entries at 1/01/03 is Dr Asset 154k, Cr Revaluation Reserve 154k.
To reflect this year's Dep charge
Dr P& L (this year) Depreciation charge £5,080
Cr B/S Agg Dep to date £5,080

Thanks (0)
27th Nov 2003 18:29

What about depreciation ?
Yes I have increased the cost by £150k, but surely this adjustment is not sufficient on its own as by only inceasing the cost will not actually reflect the correct valuation due to accumulative depreciation.

Therefore surely the accumulative depreciation also has to be transferred to the revaluation reserve with depreciation now calculated on the revalued amount.

I thought however that the difference in depreciation between the revalued amount and historic cost amount then had to be transferred from the revaluation reserve to the P&L reserve each year ??

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By Abacjm
17th Nov 2003 10:53

Revaluation Reserve
From the info provided it appears that you have upgraded the value by £150k. Is that right? If so, all that you require is to Dr the Asset with 150k and credit Revaluation Reserve with 150k, then treat Depreciation as you would normally, based on the revised asset value.

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By Sousa
31st Jan 2016 21:21

Need a quick clarification please, I revalued a portfolio of investment in stocks in the financial statements at market value, so last year accounts revaluation reserve £75k this year the movement is £70k, there was a few sales throughout the year, now how do I go about showing the movement?
Do I reverse last years upward revaluation and difference to p&l?

Many thanks in advance

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