1.27 - Query

Revaluation of Fixed Assets.

As you are aware, increases in Values arising out of any revaluation of any items of fixed assets are required to be shown as Revaluation Reserve in the accounts which is in the nature of capital reserve, that is, not being free for distribution as dividend through Profit & Loss Account. However, when any or some of these assets are sold or discarded then the relevant increases arising out of the revaluation may be transferred to revenue reserves. There appears to be some difference of opinion as to whether similar transfers may be made to revenue reserves after any or some of these revalued items of fixed assets are fully written off (i.e. fully depreciated) in the accounts. We shall, therefore, be grateful if you will refer this question to the Expert Advisory Committee for its consideration and let us know in due course the Committee’s views in this connection.


April 14, 1974

If any items of the Fixed Assets are revalued and the increase in value is shown on the revaluation reserve, appropriate amounts may be transferred from such Reserve to Revenue Reserve when some or all of the revalued items of Fixed Assets are fully written off (i.e. fully depreciated) in the accounts or sold or otherwise disposed of or retired.