Australian Revaluation Requirements
This topical essay describes the two reports added to revaluation processing in Oracle Fixed Assets: the Asset Revaluation report and the Revalued Asset Sales report.
These reports will help Victorian Government Agencies comply with the revaluation requirements of the Australian Accounting Standard AAS10, Accounting for the Revaluation of Non-current Assets. Compliance with this standard will also provide for compliance with the revaluation requirements of the international accounting standard IAS16, Accounting for Property, Plant and Equipment.
These reports address compliance with two aspects of the accounting standard. The first aspect regards posting net revaluation movements within each asset class to either the Asset Revaluation Reserve or the Profit and Loss Statement, depending on the previous net movements and postings for that asset class. This requirement is defined in paragraphs 38 and 40 of the AAS10. The Oracle Fixed Assets revaluation process posts the net movement to one account. The revaluation report provides you with the split of the revaluation movement between the Reserve and the Profit and Loss Statement, enabling you to post adjusting journals to reflect the movement in compliance with AAS10.
The second aspect addressed by these reports is the treatment of the revalued assets on sale. AAS10 requires that the profit/loss on sale be based on the written down value of the asset and is silent on the required treatment for the revaluation reserve. The Victorian Government states in its Accrual Accounting Manual, Chapter 8, Section 8.7, Disposals of Revalued Assets: "When revalued assets are sold, the revaluation reserve is reduced by the amounts held in reserve with respect to those assets. The revaluation increment with respect to assets that have been sold is transferred to Accumulated Surplus."
Basic Business Needs
The Oracle Assets Australian Revaluation reports provide you with the features you need to comply with paragraphs 38, 40, and 50 of AAS10. You can:
- Post adjusting journals to the ledger to reflect the net revaluation movements within each asset class to either the Asset Revaluation Reserve or the Profit and Loss Statement in compliance with AAS10.
- Identify at a point in time (point of sale of an asset) the net revaluation movement life-to-date for a class of assets and the net position for the asset being sold.
- Post adjustments to the revaluation reserve for an asset and its net class movement.
Overview of Current Revaluation Functionality
Oracle controls each revaluation and its associated parameters through default revaluation rules that you set up for each asset book. When you save a revaluation, Oracle Assets assigns it a Mass Transaction Number, which can be used to control the processing of revaluation and to review the results of previous revaluations.
The current standard reporting is based on each revaluation. The standard application does not report life-to-date revaluation movements for an asset or asset class. The standard revaluation reports are the Mass Revaluation Preview Report and the Mass Revaluation Review Report (refer to the Oracle Assets User's Guide).
For additional information about the standard functionality see:
- "Asset Management in a Highly Inflationary Economy (Revaluation)" in the Oracle Assets User's Guide. This essay summarizes the revaluation functionality and discusses the use of revaluation functions and the choices available in the selection of parameters to structure each revaluation.
- "Revaluing Assets" in the Oracle Assets User's Guide. This section describes the Mass Revaluation form and discusses how to use it.
Parameters Required to Comply with AAS10
To comply with the revaluation requirements of AAS10, Oracle suggests that you set the following asset book and revaluation parameters within Fixed Assets.
Asset Book Parameters
Set the following parameters to the suggested values to facilitate compliance with AAS10.
- The Asset Book must be set up to allow revaluations.
- Revalue Depreciation Reserve should be set to No.
- Amortize Revaluation Reserve should be set to No.
- Retire Revaluation Reserve should be set to No.
- Rules for revaluing fully depreciated (reserved) assets also need to be set at this level but can be overridden for each revaluation and for each individual asset in the revaluation.
Revaluation Parameters
You can override the rules for revaluing fully depreciated assets when you set up a particular revaluation.
When you set the percentage revaluation movement for an asset class or individual asset, the percentage should be based on the asset cost and the adjustment needed to move the asset cost to the new revalued amount.
Parameters Required to Comply with AAS10
To comply with the revaluation requirements of AAS10, Oracle suggests that you set the following asset book and revaluation parameters within Fixed Assets.
Asset Book Parameters
Set the following parameters to the suggested values to facilitate compliance with AAS10.
- The Asset Book must be set up to allow revaluations.
- Revalue Depreciation Reserve should be set to No.
- Amortize Revaluation Reserve should be set to No.
- Retire Revaluation Reserve should be set to No.
- Rules for revaluing fully depreciated (reserved) assets also need to be set at this level but can be overridden for each revaluation and for each individual asset in the revaluation.
Revaluation Parameters
You can override the rules for revaluing fully depreciated assets when you set up a particular revaluation.
When you set the percentage revaluation movement for an asset class or individual asset, the percentage should be based on the asset cost and the adjustment needed to move the asset cost to the new revalued amount.
Generation of the Revaluation Report
The Revaluation Report is a cumulative listing of all revaluations of the assets in the specified book or class up to the current revaluation. the current revaluation is reported separately. Only previous revaluations that have been completed are included in the report. The separation of previous and current is required in order to determine the accounting treatment for the current revaluation.
The report is sorted by asset class and lists all assets in the class that were previously revalued or are being revalued in the current revaluation. Disposed assets are not included.
Generation of the Revalued Asset Sales Report
The Revalued Asset Sales Report shows sales of revalued assets over a period of time and the revaluation balance for a single asset class or all asset classes.
The report lists all assets sold within the specified date range. It also provides a net revaluation position for the asset class at the start and end date of the period. This report facilitates the creation of manual journals in General Ledger to reflect the movement in the revaluation reserve due to the sale of assets.
