Understanding the Calculations for the Revaluation Journal

When you run the Revaluation Journal program (R12845), the program uses the existing revaluation indexes to calculate a new rate that it uses to revaluate the assets. The system retrieves these indexes to calculate the new rate:

• The index that corresponds to the last day of the month before the current revaluation date.

  The system uses this index as the numerator factor.

• The index that corresponds to the last day of the month previous to the last revaluation. For example, if the last revaluation was calculated in December 2005, the system uses the index that corresponds to November 30 of 2005. The system uses this index as the denominator factor.

  Note: If the acquisition asset date is later than the last revaluation date, the system uses the index that corresponds to the last day of the month that is previous to the acquisition date.

The system calculates a new rate using the formula: (Numerator Factor) / (Denominator Factor). The system rounds the result to one decimal.

To calculate the revaluation amount, the system multiples the new rate by the accumulated asset balance as of the last revaluation date ((revaluation amount) = (last revaluation balance) × (new rate)). After the system calculates the revaluation amount, it calculates the adjustment amount using the formula: (revaluation amount) – (current asset balance).

The system generates journal entries for the adjustment amount and assigns the transaction a document type of AR and a batch type of AR. The system debits the account in which the adjustment occurs and credits the offset account that it retrieves from the one of the AAI items: FR1, FR2, or FR3, depending on the account associated with the asset that was revalued.