15.05. Fixed Asset Revaluation

• Organization - select the organization whose assets will be reevaluated;

• Document No - automatically filled in by the system after clicking on the Save button, as according to the sequence defined at document type level;

• Document Type - select the document type defined for fixed asset revaluations;

• Account Date - the date that the revaluation process effects are posted;

• Calendar - the calendar used for the selected organization;

• Period - the period corresponding to the revaluation date;

• Accounting Schema - the accounting schema used to post the revaluation process effects;

• PostingType - select the type of the transferred value (usually Actual);

• Asset Group - select the asset group that will be reevaluated;

• Revaluation Type - select the revaluation method:

  • Gross value method - this will reevaluate both the asset's gross value and the cumulated depreciation. Used when you can employ the replacement cost because you can determine the real market value of the asset.

  • Net value method - this will only reevaluate the net accounting value. Used when you can determine the true market value of the reevaluated asset.

• Revaluation Index % - this will only be displayed if you have selected Gross value method in the previous field. Enter the established index in absolute value (e.g. for 10% increase enter 110, for a 10 % decrease enter 90).

Click on the Add Assets to Revaluations button. The process will add to the document lines all the fixed assets belonging to the selected asset group that, together, meet the following conditions:

• Are active;

• Are not marked as Disposed;

• Cannot be found in the lines of another revaluation document from the same period, irrespective of said document's status.

The addition will fill in the following fields:

• Tenant,

• Organization,

• Code,

• Asset,

• Remaining life - months - editable in case of 0,

• Gross Value = the inventory value of the fixed asset at the revaluation date:

  • sum(fixed asset cost details) on the accounting schema currency, previous to the revaluation, for the fixed assets that have not been previously reevaluated;

  • the value of the last revaluation previous to the current one,

• Accumulated Depreciation - the value entered in the Asset Accum Depreciation Amt field in the Depreciation rates tab of the Accounting Setup tab of the Asset (Customer) window on the accounting schema corresponding to that of the revaluation document, with the rate corresponding to the period indicated on the revaluation document,

• Value to be depreciated = the value left to be depreciated at the revaluation date, taken from the Value to be depreciated field in the Depreciation rates tab of the Accounting Setup tab of the Asset (Customer) window on the accounting schema corresponding to that of the revaluation document, with the rate corresponding to the period indicated on the revaluation document.

You can manually add or erase lines in a revaluation document. Trough addition (repetitive) you can only add the fixed assets that meet the conditions described above.

After filling in the lines, click on the Revaluate Assets button.

The process will do the necessary calculations and write the results in the revaluation document lines.

• 1. If, on the master document, you have selected Gross value method in the Revaluation Type field, you will take into account the Revaluation Index %. The following will be computed:

     1. Right Value = null,

     2. Updated Gross Value = Gross Value * Revaluation Index % / 100,

     3. Updated Accumulated Depreciation = Accumulated Depreciation * Revaluation Index % / 100,

     4. Gross Value Revaluation Difference = Updated Gross Value - Gross Value,

     5. Depreciation Revaluation Difference = Updated Accumulated Depreciation - Accumulated Depreciation,

     6. Right Value Revaluation Difference = null.

  2. If, on the master document, you have selected Gross value method in the Revaluation Type field, the following will be computed:

• • 1. Right Value = manually entered for each line (fixed asset) inside the revaluation document;

       1. • the value must be strictly positive (>0)!

          • if there are lines where this value has not been entered, then an error message will be displayed.

    2. Updated Gross Value = null,

    3. Updated Accumulated Depreciation = null,

    4. Gross Value Revaluation Difference = null,

    5. Depreciation Revaluation Difference = null,

    6. Right Value Revaluation Difference = Right Value - Net Value.

The process can be run multiple times, rewriting the calculated values, as long as the document is drafted.

After finishing the calculations, complete the document, thus producing the following effects:

• 1. The system will verify that all periods older than (and including) the one on the document are open;

  2. It will unpost and delete all the calculated depreciation rates starting with the period following the one on the document;

  3. For each fixed asset, a new record will be entered in the Cost Details tab containing the following information:

     1. Cap vs Expense = Capital;

     2. Transaction Date = Account Date = Revaluation date;

     3. Posting Type = Actual;

     4. Source Type = “Revaluation” - a new value in the list;

     5. Description = “Revaluation + calendar period”;

     6. New link column containing the source revaluation line;

     7. Asset Value = reevaluated value;

     8. Currency = the one of the revaluation accounting schema;

     9. Current Qty = 1,

  4. It will generate new depreciation rates for each separate fixed asset starting from the newly entered cost:

• • 1. a new column will be added to keep the value from the new rate corresponding to the revaluation (it has distinct posting) separately;

    2. for the remaining months.

Voiding - this will erase all that was generated by the document completion action. The deleted rates are redone with the actual Create Depr. Rates process.

Accounting Consequences

The posting will generate, for each separate line, accounting transaction pairs (Db/Cr) so that one can correctly configure rules used to determine the correspondent accounts in reports such as the Account Statement and the Accounting Fact.

The following will be generated for each column as such:

• 1. “Gross value method” revaluation

     1. Favourable Difference (+, i.e. a revaluation index bigger than one has been used)

Debit “Asset Acct.” (21xx) = Credit “Revaluation Acct.” (105) with the value Gross Value Revaluation Difference

Debit “Revaluation Acct” (105) = Credit “Accum. Depreciation Acct.” (281x) with the value Depreciation Revaluation Difference

• • 1. Unfavourable Difference (-, i.e. a revaluation index less than one has been used)

Debit “Depreciation Acct.” (681x) = Credit “Asset Acct.” (21xx) with the absolute value (Gross Value Revaluation Difference)

Debit “Accum. Depreciation Acct.” (281x) = Credit “Revaluation Gain Acct.” (781x) with the absolute value (Depreciation Revaluation Difference)

• 1. “Net value method” revaluation

     1. Favourable Difference (difference from reevaluating positive right value)

Debit “Accum. Depreciation Acct.” (281x) = Credit “Asset Acct” (21xx) with the value Accumulated Depreciation

Debit “Asset Acct.” (21xx) = Credit “Revaluation Acct” (105) with the value Right Value Revaluation Difference

• • 1. Unfavourable Difference (difference from reevaluating negative right value)

Debit “Accum. Depreciation Acct.” (281x) = Credit “Asset Acct” (21xx) with the value Accumulated Depreciation

Debit “Revaluation Loss Acct.” (681x) = Credit “Asset Acct.” (21xx) with the absolute value (Right Value Revaluation Difference)

Posting the rates following a revaluation

A part of the obtained surplus can be transferred as the asset is used by the organization. The value of the transferred surplus is equal to the difference between the depreciation calculated based on the reevaluated accounting value and the one calculated based on the active's initial cost. The new depreciation rates will highlight the values of the differences between the new and old rates on distinct columns.

Debit “Depreciation Acct.” (681x) = Credit “Accum. Depreciation Acct.” (281x) with the value of the new rate

and, simultaneously,

Debit “Revaluation Acct” (105) = Credit “Revaluation Reserve Acct.” (1065) with the value of the difference

Posting an asset disposal following a revaluation

The revaluation surplus found in the 105 "Revaluation Reserve Acct." can be directly transferred to the reserves (the 1065 account: Reserve representing the revaluation reserve surplus) when the active is to be disposed (sold, quashed).

Add the following component to the actual fixed asset disposal and sales posting rules :

Debit “Revaluation Acct” (105) = Credit “Revaluation Reserve Acct.” (1065)

with the value left in the credit of the 105 account for the respective fixed asset (=the sum of the differences of the future unrealized rates)