What is asset revaluation reserve and how is it treated in
the books of accounts
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Answer Posted / h.r. sreepada bhagi
In case a company revalues its fixed assets and the value
turns out to be higher than the book value and the assets
are stated at the increased value in the books of accounts,
the amount by which the assets value is stated higher than
the book value, is treated as assets revaluation reserve.
This Asset Revaluation Reserve will be shown on the
Liabilities side of 'Horizontal Balance Sheet' or under
Sources of Funds of 'Vertical Balance Sheet'.
The increase in the value of assets due to revaluation will
not have any effect on the P&L A/c. necessary depreciation
calculation & adjustment needs to be done to carry forward
the assets at the new value.
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