Revaluations and Impairments


Managing revaluations and impairments of fixed assets

One of the areas of complexity that our users come to us with is that of managing revaluations and impairments of their fixed assets.

But what are these and when do you need them?

In broad terms, both sets of accounting standards require accounts to present a true and fair view of the numbers of the business.

For Fixed Assets, this is generally taken to mean that the value should be the approximate value of the asset if it was to be sold in its current state.

And a reasonable way of estimating this is by the traditional depreciation methods that we all know and love.

But sometimes the market value of an asset can fluctuate for unforeseen reasons hence the need to revalue or impair an asset.


IFRS allows a business to choose to adopt a policy of revaluing assets but these need to apply to all the assets in that class so you can’t pick and choose what to revalue.

There are also requirements about how often you have to revalue these assets.

Property companies are a good example of the kind of business that adopt revaluation as a main accounting method.

Once an asset has been revalued, it must continue to be revalued for its remaining life.

If the asset is revalued upwards then that amount is taken to a special revaluation reserve that is displayed in the Shareholders Equity part of the balance sheet.

If an asset is valued down, then any existing revelation reserve for that asset is written off first and then any further amount must be shown as a loss in the P&L.

Subsequent upwards adjustments can be written back to the P&L up until the loss has been fully reversed and then the remaining uplift is back to the revaluation reserve.


US GAAP does not permit plant, property and equipment to be reported under the revaluations method.


Impairments are used for assets that are not subject to revaluations and are only allowed as downward adjustments (but under IFRS may be reversed as noted below). An impairment may be caused by an event outside of the control of the business, examples being:

  • A council rezoning negatively impacting values of both land and buildings held by a business
  • A competitor releasing a revolutionary new product or approach that reduces the expected value of future output from existing plant, thus reducing the value of that plant on the open market

As noted above (under IFRS but not US GAAP) the impairment can be reversed if there is a change in the circumstances that caused the original impairment. However, the reversal can only be made to a cap of the net book value that the asset would have been had it continued to be depreciated under the method used prior to the impairment.

We take depreciation and leasing seriously

We undertake detailed modelling of fixed asset depreciation and lease calculation rules for both accounting and tax.

We monitor changes to ATO tax rulings and accounting standards like IAS 16 and IFRS 16 so you don’t have to.

And, of course, we are ISO27001 certified.

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Why our clients love AssetAccountant

How AssetAccountant handles revaluations and impairments

Adjustments: AssetAccountant allows adjustments for your tax and/or accounting depreciation registers. You are able to nominate a change to either the original cost base OR an increase/decrease to the accumulated depreciation. All changes are carried through to your next journal posting.

Revaluations/Impairments: Is an accounting concept only applied slightly differently in US GAAP and IFRS. AssetAccountant enables the possibility of revaluing an asset either upwards or downwards. In case of an increase in revaluation, a revaluation reserve will be created and reflected in the asset’s specific details, offsetting any potential future impairment.

AssetAccountant will allow you to manage and reverse impairments (where allowed by the applicable accounting standard you have chosen in the software).

We keep track of what depreciation would have been had the asset not been impaired so that you keep your write backs within the accounting rules.

AssetAccountant keeps a detailed audit trail of every event.

Users may also provide detailed reasoning for the revaluation for future scrutiny by auditors and/or successors.

AssetAccountant – saving you from spreadsheets since 2019