Revaluation of fixed assets is required when they wear out during the production process. The current legislation established the classification of this type of assets, the period of their useful use, the procedure for depreciation charge. Any company has the right to assign increasing factors for depreciation deductions independently, as well as choose the appropriate method of depreciation.
Even taking into account the fact that revaluation of fixed assets gives enterprises the opportunity to significantly save on tax deductions or increase the value of their assets, not all of them take into account the opportunities provided by law. During this operation, you can reduce income tax by increasing the
depreciation rate. It should be noted that depreciation charges during the period of use of fixed assets are carried out uniformly, but at the same time, the market prices of equipment change at different rates. The result of all this is that there is a big difference between the market and book values of the equipment, and this distorts the data on the real cost of the equipment.
Evaluation and revaluation of fixed assets is also required in order to more accurately determine
financial indicators that are distorted without these procedures, giving a false idea of
real investment needs. With low depreciation, it is not possible to fully compensate for the disposal of fixed assets. When revaluation of fixed assets is carried out regularly, this allows you to bring the market and
book values into line. This is the only way to effectively manage the company's non-current capital. This procedure has a positive effect on profitability, the size of net assets, their turnover, which allows to improve the financial performance of the organization.
Revaluation of fixed assets is a very time-consuming process, requiring the availability of certain materials, as well as experienced professionals. When transferring or selling part of the property, this procedure will determine its real market value. Usually, the revaluation procedure is carried out once a year. It is carried out by determining the current or initial value, accrued depreciation for the operating period. During this process, experts make an inventory of objects, and then determine the financial models that are optimal. The revaluation of
fixed assets, the posting of which should be recorded in the balance sheet, is part of national measures aimed at determining the price of the property of the organization. With a timely procedure, the company can not only increase the price of assets, but also get opportunities to increase the size of the authorized capital of the company.
Revaluation of fixed assets can be carried out by the organization on its own or with the involvement of third-party experts in this field. This procedure can be carried out both throughout the organization as a whole and in its individual divisions.