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Balance sheet
Accountancy
At what value assets are normally shown in balance sheet historical cost/revalued cost? If an asset is shown in historical cost later can it be shown in revalued amounts in the balance sheet or should continue to be shown as historical cost only.? if shown at revalued cost what is the accounting treatment?
Answers (2)
Assets are normally shown at historical cost. If they are revalued, then the revalued amount is to be shown in the balance sheet and the treatment will be as follows: 1) If the revalued amount exceeds the Carrying amount, then the difference shall be recorded on the credit side of P&L 2)If the Carrying amount is more than the revalued amount, then the difference shall be debited in P&L.
Assets are typically shown in the balance sheet at their historical cost, which is the original purchase price or cost incurred to acquire the asset. Assets can be shown at revalued amounts following the principles of AS-10. ONce you complete AS-10, you will understand this. Brief explanation is given below. When an asset is shown at its revalued amount, the following accounting treatment is applied: Revaluation Increase: If the revaluation increases the asset's carrying amount, the increase is credited to Revaluation Surplus unless it reverses a previous revaluation decrease recognized in profit or loss. If it reverses a revaluation decrease recognized previously in profit or loss, the increase is recognized in profit or loss to the extent of that decrease. Revaluation Decrease: If the revaluation decreases the asset's carrying amount, the decrease is recognized in profit or loss, unless it reverses a previous revaluation surplus . If it reverses a revaluation surplus, the decrease is debited to revaluation surplus, reducing the revaluation surplus to the extent of any credit balance existing in the revaluation surplus for that asset.
