Inventory revaluation reserve treatment

Saji (student) (30 Points)

20 July 2013  

Dear Sir/Mam,

I have reavaluated my inventory due to the change in Cost price and there is a Revaluation reserve generated. I have kept this in the Balance Sheet under Reserves & Surplus. Now i need your advice in the subsequent adjustment of the reserve. How Do I do that? Should i need to set off this from the Retained earnings or need to charge to P&L. Please let me know, What accounting policy states about this?