Revaluation of Assets: Financial Accounting & Reporting Analysis

This report provides an analysis of the accounting treatment for the revaluation of assets, particularly in the context of heritage buildings and compliance with AASB 1041. It argues that the proposed accounting treatment relating to the revaluation of assets is acceptable, as companies can revalue assets at any time using various methods, including fair value for heritage assets. The report highlights the recent changes within AASB 1041, which mandates the use of the fair value method for measuring asset value, emphasizing its importance over historical cost due to considerations of depreciation and impairment. It further outlines the disclosure requirements for revaluing both non-current and heritage assets, including the basis of measurement, depreciation method, gross carrying amount, accumulated depreciation, expenditure recognized, effective date of revaluation, and involvement of independent valuers. The report concludes by referencing relevant books, journals, and online resources to support its analysis.

Financial Accounting &
Reporting Unit

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
4...................................................................................................................................................3
REFERENCES................................................................................................................................5

MAIN BODY
4
The proposed accounting treatment relating to the revaluation of asset is acceptable. The
reason pertaining to the fact is that company can revalue the assets any time by using the various
methods of revaluation. In case of the heritage building the company can solve the issue of
revaluation because the heritage assets are also revalued at the fair value (Ferri, Sidaway and
Carnegie, 2021). Hence, all the asset of the company can be revalued on the basis of fair value
and financial statement can be prepared with that amount as well. this is particularly because of
the reason that the heritage assets are also subject to all the requirement like depreciation,
impairment cost and other like other non- current asset. Thus, these heritage assets are also
treated in similar manner like other assets only.
The recent change within the AASB 1041 that is ‘Revaluation of non- current asset’
mandates the company to undertake the use of fair value method as a basis of measuring the
value of asset. The reason underlying this fact is that when the company will revalue the asset
then it will be based on the fair value only and not the historical value. Also the historical value
does not provide the actual value of the asset. This is particularly because of the reason that when
the asset is used in business then its value is also being depreciated and also there are some of the
cost of impairment as well. but the use of valuing the asset on basis of historical cost does not
include any of these adjustment. Hence, it is very essential for the company that they must value
the asset on the basis of fair value method (Juliyanti and Wibowo, 2020). This is necessary for
the reason that when fair value is used then it takes into consideration all the charges, cost of
maintenance, depreciation and all other cost. Thus, this provides a fair and true picture of the
asset and actual value is being recognized.
There are different disclosure requirements which the company need to follow at time of
revaluing the asset both non- current and heritage asset. The reason underlying this face is that
there are different elements which need to be presented within the financial statements. These
disclosures are as follows-
 The company need to disclose the basis of measurement which they have used in order to
revaluing the asset.

 Along with this the depreciation method also need to be disclosed within the financial
statements
 Moreover, in addition to this, the gross carrying amount and the accumulated
depreciation charged over the assets.
 Along with this, the amount of expenditure which is recognised at time of carrying
amount relating to the item of property and the plan and equipment (Property, plant and
equipment, 2019).
 It also includes the effective date of revaluation that is the date on which the asset was
revalued.
 Along with this it is also disclosed that whether any independent valuer was involved or
not at time of the revaluation.
 For each and every asset being revalued all the carrying amount along with the
revaluation surplus are also disclosed within the balance sheet.

REFERENCES
Books and Journals
Ferri, P., Sidaway, S. I. and Carnegie, G. D., 2021. The paradox of accounting for cultural
heritage: a longitudinal study on the financial reporting of heritage assets of major
Australian public cultural institutions (1992–2019). Accounting, Auditing & Accountability
Journal.
Juliyanti, W. and Wibowo, Y. K., 2020. Accounting for heritage assets: why and how?
(Literature study on cultural heritage in Indonesia). Jurnal Akuntansi, Keuangan, dan
Manajemen. 2(1). pp.1-11.
Online
Property, plant and equipment. 2019. [Online]. Available through: <
https://www.aasb.gov.au/admin/file/content105/c9/AASB116_08-15_COMPdec16_01-
19.pdf >