5 - Downward Revaluation on Downward Revaluation Accounts

To post this type of entry you shall need the following accounts from the fixed asset register:

• to post to the debit side: 
  • Downward revaluation - Debit (e.g. 0390D)
  • Downward revaluation - Difference (e.g. 7200D)
• to post to the credit side: Downward revaluation - Credit (e.g. 0212K)

	To establish the appropriate carrying value and with this the corresponding difference from the new value it is MANDATORY that you prior to the entry of downward revaluation calculate depreciation to the date of downward revaluation.
	If upward revaluation has been used with fixed asset prior to downward revaluation (see type 4 - Upward revaluation on upward revaluation accounts), you have to first reverse the upward revaluation (see type 7 - Reversal of upward revaluation).

In accordance with SRS (2002) 1.29 in case when the accounting value of fixed asset exceeds its recoverable amount you MUST perform special revaluation of tangible fixed assets. The pure purchase value or value in use is taken as the recoverable amount. It depends in which of this two is larger. Such a decrease presents a loss due to downward revaluation and is disclosed as revaluated operating expenses (e.g. 720D) and not as an increase in depreciation cost.

Depreciation of such downward revaluation (see 23 - Depreciation on downward revaluation accounts) presents a decrease in depreciation cost (accounts of group 43).

Example:

• Downward revaluation on downward revaluation accounts