Revaluation of fixed assets is required when in the production process they wear out. The current legislation has established the classification of this type of assets, the period of their useful use, the order of depreciation charges. Any company has the right to assign incremental coefficients to depreciation charges on its own, and also to choose a suitable method for calculating depreciation.
Even taking into account the fact that the 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 advantage of the opportunities provided by the law when registering. In carrying out this operation, it is possible to reduce the profit tax by increasing the depreciation rate. It should be noted that depreciation charges during the period of use of fixed assets are carried out evenly, but 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 equipment, and this distorts the data on the real cost of equipment.
Evaluation and revaluation of fixed assets is also required in order to more accurately determine the financial indicators that are distorted without these procedures, giving the wrong idea of real investment needs. Under lowered depreciation, the process of disposing of fixed assets can not be fully recovered. When the revaluation of fixed assets is carried out regularly, this makes it possible to align market and book value. This is the only way to effectively manage the company's non-current capital. This procedure affects positively the indicators of profitability, the amount of net assets, their turnover, which allows improving the financial performance of the organization.
Revaluation of fixed assets is a very labor-intensive process that requires the availability of certain materials, as well as experienced specialists. 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 produced by determining the current or historical cost, the accrued depreciation amount for the operating period. In the course of this process, experts make an inventory of objects, after which they determine the financial models that are optimal. Revaluation of fixed assets, posting on which should be accounted for in the balance sheet, is part of the nationwide measures aimed at determining the price of the organization's property. With a timely procedure, the company can not only increase the asset price, but also gain opportunities to increase the size of the company's authorized capital.
Revaluation of fixed assets can be carried out by the organization independently or with the involvement of outside experts in this field. This procedure can be carried out both for the organization as a whole and for its individual units.