Revaluation reserve

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Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2012 What is Revaluation Reserve?What is its accounting treatment?

sahil jain

sahil jain (Expert)
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19 January 2012 Revaluation reserve is the reserve which is created when any Fixed Asset/ Non Current Asset(As Per IFRS) is revalued upwards.

In that case instead of transfering the value with which the respective asset has been increased to Income Statement it is transferred to a seperate account i.e Revaluation Reserve account so that the profits are not overstated.

Accounting Treatment:
Following entry is passed when revaluation reserve account is to be created

Fixed Asset Account Dr ---
to Revaluation Reserve Account ---

and this is shown under Reserves on the liability side of the Balance Sheet

Guest

Guest (Expert)

19 January 2012 Agree with Mr. Sahil Jain.

Revaluation reserve is a non cash reserve. There is no inflow of funds in this case to the company.