fair value reserve

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I want to write down the value of fixed assets in the balance sheet.  This would be separate entries to depreciation.  It is because some of the assets are old and obsolete and have nil value.  What is the corresponding debit in the p and l account?  Would it be 'fair value reserve' or something else?  I am thinking this through wrongly?        It is a limited company with sole director and shareholder.  Would any entry I make reverse the following year eg transfer to /from fair value reserve.  thank you.


Replies (7)

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Scalloway Castle
By scalloway
18th Feb 2023 14:04

If your company is eligible for the micro-entities regime and uses FRS 105 then you do not revalue company assets. Your accountant will advise further.

Thanks (1)
By David Ex
18th Feb 2023 14:29

Why do “old” assets still have a material net book value?

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Replying to David Ex:
By lionofludesch
19th Feb 2023 07:18

David Ex wrote:

Why do “old” assets still have a material net book value?

I'd go further. Why do you still have them?

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By Bobbo
18th Feb 2023 15:02

if you treat as accelerated depreciation, depreciation expense.
if you treat as impairment, impairment expense.

this, probably, has absolutely nothing to do with fair value reserves.

Do consider David's point about why do old obsolete assets still have any value at all.

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By paul.benny
18th Feb 2023 16:15

And nothing will reverse in the following period unless said assets cease to be old and obsolete.

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paddle steamer
19th Feb 2023 10:25

Depreciation or loss on disposal would be where I would bury the cost, however I tend to always carry assets in use (if they are still in use) at a min £1(Cost> Acc Depcn by £1) and do not write off fully unless heaved/no longer useful, we have a lot of £1 bits of kit still in use.(Scaffolds/Stihl saws/ladders etc)

Personally I tend to ignore value and consider economic utility of assets, suspect these days this is wrong but certainly ,back when I studied, depreciation was not a valuation balancing figure to get to current value but instead a measure of use.

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John Toon
By John Toon
19th Feb 2023 14:32

If the fixed assets are old and obsolete, then irrespective of GAAP reporting regime, these are impaired. An impairment charge is separate from depreciation - you'd only amend this if the useful economic life changed.

You can charge an impairment against a reval reserve and in some circumstances reverse these. FRS 105, 102 or IFRS give you the precise details when this is allowable.

Bear in mind if the assets have some residual value (scrap etc) then you won't impair down to zero.

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