Revalue/Impair Asset

Access a revaluation/impairment process for tangible fixed assets from the batch jobs menu.

Control - Batch Jobs - Revalue/Impair Asset

A screen is presented to re-value or impair the value of an asset and generate the appropriate accounting entries and history of the transaction.

Revaluation is a process of updating the value of groups assets in your balance sheet to open market values at the date of the revaluation assuming existing use. Financial reporting standards state that Tangible fixed assets can only be re-valued where there is a stated policy to re-value. Where such a policy is adopted then it should be applied to specific groups of tangible fixed assets, but it need not be applied to all groups.

Impairment is a process of reflecting a lower value of tangible fixed asset as a result of negative impacts on the financial performance of the business. Usual examples of circumstances are a series of financial losses or a major change in a segment of your market place. Impairment will happen infrequently, but if it does it will likely impact all assets. The effect is a one-off write down in the net book value, and is shown as additional depreciation. For the rest of the assets useful life, the depreciation charge is based upon the lower net book value.

Before re-valuing or impairing any assets, Liberty Accounts strongly recommend you seek professional advice.

Revaluation of an Asset

Information needed to re-value assets

• The reference name and description of the assets
• The value of each asset
• The date of the valuation

Select the asset to be re-valued from the drop down list in the Asset Name field. Enter the relevant date of the revaluation in the Re-valued As At box. Enter the new value given to the asset by the valuer in the New Value box.

Complete the transaction by clicking SUBMIT.

The system will put an amount representing the amount of the revaluation in to the relevant asset revaluation account. The calculation is as follows: - Revaluation amount = New value - Original Cost (or previous valuation) + Cumulative depreciation

Depreciation will now be based on the new value over the remaining economic useful life of the asset.

Impairment of an Asset

Information needed to record an impairment.

• The reference name and description of the assets
• The impaired value of each asset
• The date of the impairment

Select the asset to be re-valued from the drop down list in the Asset Name field. Enter the relevant date of the impairment in the Re-valued As At box. Enter the new Impaired value of the asset in the New Value box.

Complete the transaction by clicking SUBMIT.

The system will put an amount representing the amount of the increased depreciation in to the relevant asset depreciation account. The calculation is as follows: Additional Depreciation = Impaired value - Cumulative depreciation immediately before impairment

Depreciation will now be based on the impaired value over the remaining economic useful life of the asset.

The link offers examples of how the system calculates reducing balance depreciation including revaluation and impairment.