Revaluing an asset (tutorial)

 

Changes to an asset's value that don't involve any actual improvement to the asset itself, and which don't affect the historic cost of the asset, should be entered as a revaluation addition. These are usually entered when you obtain a valuation for an asset and need to adjust its value. This tutorial shows how to enter a revaluation addition for such a situation.

 

image\bm1.gif  Both increases and decreases in an asset's value are entered as addition revaluations.

 

Open the tutorial database Learn how.

 
image\bm1.gif This tutorial uses the Transactions Tab of the List assets window.  To open the List assets window either click the List assets command on the Assets menu or press Ctrl + L.
 

Step 1: Entering a revaluation

 

This asset has a current value of $94,570.00 and depreciation rates of 0% for both the tax and accounting ledgers.

 

A valuer's report for the section has been received, and it's now worth only $90,000.00. Its value needs to be adjusted accordingly.

i_yellow_sm.jpg(Section is Kiwi for a plot or block of land)

 

Because revaluation additions record the change in the asset's value (instead of the new value itself), the change must be entered as

 -$4,570.00. Click on the Transactions Tab and click the Add button to enter the revaluation addition in the Asset addition window.

 

image\bm84.gif

 

Enter the following information:

 

Date  31/03/2008

Value  -$4,570.00

and any other details you wish

Click the Revaluation check box to mark the addition as a revaluation, and click OK.

 

image\bm1.gif  The popup calculator can be used to calculate the revaluation's value. Press the space bar, enter 90000 - 94570 and press ENTER twice.

 

The revaluation will now show up in the Addition details list:

 

image\bm85.gif 

 

Step 2: Viewing the asset's depreciation

 

To view the new values for the asset, click the Depreciation Tab.

 

Since the revaluation was entered in period 12 of the year, select that period on the period button bar. The Accounting column will now show the following figures:

 

Year to date values

Additions -$4,570.00

Period closing values

Cost or valuation $90,000.00

Current value $90,000.00

 

As revaluations only affect the accounting ledger, the figures in the Tax column will be unchanged.

 

 image\bm86.gif

 

image\bm1.gif  Historic cost changes, such as the additions covered in the previous sections, are entered as a single cost changes and are applied to both ledgers identically. Revaluation additions only affect the accounting ledger, and the tax value of the asset is not changed.

 

 

What next?

 

These tutorials have shown how to enter addition and revaluation transactions to record changes and improvements to assets.

The next tutorial section, Partially disposing of an asset, shows how to enter partial disposals for when an asset is partially sold or written off.

 

 

See also

Asset transactions tutorials