Importance of Revaluation of Assets and Fundamental Characteristics of Financial Information

Running head: BUSINESS ACCOUNTING
Business Accounting
Name of the Student
Name of the University
Author’s Note

1BUSINESS ACCOUNTING
Summary
It can be seen from the first part of the essay that the management of Telstra is required to
undertake the revaluation of the property in order to ensure the faithful representation of the
financial information. After that, this essay discusses about the two main fundamental
characteristic of financial information that are relevance and faithful representation. It can be
seen from the third part of the essay that the management of BRISCOE Group Limited has
ensured the presentation of fundamental characteristic of financial information in the reporting of
inventories and property, plant and equipment which helps the investors in gaining the
information so that they can make effective investment decision about the firm.

2BUSINESS ACCOUNTING
Table of Contents
Part 1................................................................................................................................................3
Part 2................................................................................................................................................4
Part 3................................................................................................................................................6
Part 4..............................................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

3BUSINESS ACCOUNTING
Part 1
Revaluation of assets is considered as a crucial aspect for the managements of the
companies because it helps in showing the fair value of the assets. For this reason, asset
revaluation is considered as the adjusted made to the recorded value of an asset in order to
accurately reflect the current market value of that particular asset (Choi et al. 2013). The vast
practice of asset revaluation can be seen in the financial system of Australia where the
availability of AASB 116 Property, Plant and Equipment can be seen for providing the
necessary guidelines on property revaluation. According to AASB 116, Paragraph 31, after the
recognition of an asset, a company is needed to carry an item of property, plant and equipment at
a revalued amount whose fair values can be measured on reliable basis (aasb.gov.au 2019). It
also states that the item needs to be carried at fair value at the revaluation date. The frequency of
revaluation is largely dependent upon the fair value changes of the item that is being evaluated
by the company (aasb.gov.au 2019).
Now, it needs to be mentioned that the revaluation of a property at fair value has certain
positive connection with the qualitative characteristic of faithful representation. Faithful
presentation is considered as a crucial qualitative characteristic which ensures that financial
statements accurately reflect the business condition (Sytnik 2014). This characteristic states that
the financial information must be presented in the true and faithful manner in order to be useful
to the users of the financial statements. For example, in case a firm shows in its statement of
financial position that it has an accounts receivable of $100,000 as of the end of the year, then
the amount should indeed have been presented in the statement of financial position of that