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UK Charity - Is Property Revaluation Mandated?

Market value of freehold property now 100 x original cost, but still held at purchase price

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A charity acquired a large premises in the UK 50 years ago and it's in use daily. However, it keeps the asset on the balance sheet at cost.  I do not believe this is a "true and fair" picture of the balance sheet. The rest of the board, accountants and even audiors seem OK with it. 

I know IFRS mandates a revaluation at least every 5 years, but am not clear if revaluation is actually mandated in the UK.

Thoughts?

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Scalloway Castle
By scalloway
21st Sep 2019 16:12

The charity I am treasurer of had their property revalued last year. However we did not put it through the accounts as we were told if we did it would need to be depreciated and the deprecation would knock a hole in our annual surplus.

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By WhichTyler
22nd Sep 2019 17:44

Well that's just silly....

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By johnt27
23rd Sep 2019 10:09

scalloway wrote:

The charity I am treasurer of had their property revalued last year. However we did not put it through the accounts as we were told if we did it would need to be depreciated and the deprecation would knock a hole in our annual surplus.

Which indicates that depreciation policy isn't appropriate under FRS102/SORP

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By WhichTyler
22nd Sep 2019 17:50

Refer to charity sorp, then come back to us when you have read it if you have more questions

10.22. Charities may opt, after initial recognition at cost, to use the revaluation model; for more information refer to section 18 of FRS 102.

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By johnt27
23rd Sep 2019 10:13

I assume that the accounts disclose a material difference between the carrying value and FV of the property? This has long been a requirement of current and previous GAAP and addresses your T&F concerns.

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Culverwell Venge
By Culverwell Venge
23rd Sep 2019 20:43

Paragraph 10.33 of the Charities SORP (FRS 102) states that ‘A charity may choose to adopt an accounting policy of revaluing one or more classes of the tangible fixed assets it holds….’ Paragraphs 10.35/6 goes on to prescribe the treatment that such assets should be subjected to once the revaluation policy is chosen.

Note that it is not mandatory that a charity should revalue its tangible assets (as the cost of revaluation may be more than the benefit of having the revaluation done). It is up-to the charity to choose which accounting policy to follow.

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