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Chapter 6

1.2 Revaluation using fair value method

 If a business decides to revalue a non-current asset, it must revalue all other
assets in the same class.

 The frequency of revaluation will depend upon market conditions and will
normally be carried out by an independent, professionally qualified person.

 Other classes of non-current asset may still continue to be accounted for using
the cost model.

 Steps to account for revaluation are as follows:

 Restate the asset cost to the revalued amount and
transfer the increase to the revaluation surplus
Step 1 account.

 Remove any accumulated depreciation at the
revaluation date and transfer to the revaluation
Step 2 surplus account.

 Recalculate the current year depreciation charge
on the revalued amount over the remaining useful
Step 3 life.

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