Asset Revaluation Rules

When defining your asset books, you can set up default revaluation rules to determine how revaluation calculations are handled. The rules for revaluation often differ from country to country. You can override the default rules when necessary.

You can set up the following revaluation rules:

• Allow revaluation

  • Cost

  • Net book value

• Revalue depreciation reserve

• Revalue YTD depreciation

• Amortize revaluation reserve

• Retire revaluation reserve

• Include current period depreciation

• Revalue fully reserved assets

  • Life extension factor

  • Maximum revaluations

  • Life extension ceiling

• Allow capital fund accounting

Allow Revaluation

Select the Allow revaluation option to allow revaluation for assets in this book. You can choose to allow cost revaluations, net book value revaluations, or both.

Revalue Depreciation Reserve

When deciding whether to revalue depreciation reserve, consider the following:

Revalue Depreciation Reserve	Effect on Revaluation
Yes	Oracle Assets revalues the accumulated depreciation balance at the start or end of the period in which the revaluation transaction occurred. It calculates the revalued accumulated depreciation as the difference between the revalued cost and the revalued net book value.
No	Assets revalues only the cost of the asset, and the accumulated depreciation balance remains the same.

Note: You can't revalue depreciation reserve when using the net book value revaluation method, because the depreciation reserve as of the revaluation date is adjusted against the asset cost.

Revalue Year-to-Date Depreciation

When deciding whether to revalue year-to-date depreciation, consider the following:

Revalue Year-to-Date Depreciation	Effect on Revaluation
Yes	Assets revalues the carrying cost of the asset at the start of the financial year in which the revaluation transaction occurs and restates the year-to-date depreciation.
No	Assets revalues the carrying cost of the asset at the start or end of the period in which the revaluation transaction occurs and doesn't restate the year-to-date depreciation balance.

Amortize Revaluation Reserve

When deciding whether to amortize revaluation reserve, consider the following:

Amortize Revaluation Reserve	Effect on Revaluation
Yes	Assets amortizes the revaluation reserve balance over the remaining life of the asset. Assets calculates the periodic amortization amount when it calculates the depreciation expense for the period.
No	The revaluation reserve balance remains unchanged. Note: Only revaluation, impairment, and retirement transactions can change the revaluation reserve balance.

Retire Revaluation Reserve

When deciding whether to retire revaluation reserve, consider the following:

Retire Revaluation Reserve	Effect on Revaluation
Yes	Assets retires the revaluation reserve balance when the asset is partially or fully retired in proportion to the cost retired.
No	The revaluation reserve balance remains unchanged.

Include Current Period Depreciation

When deciding whether to include current period depreciation, consider the following:

Retire Revaluation Reserve	Effect on Revaluation
Yes	Assets revalues the carrying cost of the asset at the end of the period in which the revaluation transaction occurs.
No	Assets revalues the carrying cost of the asset at the start of the period in which the revaluation transaction occurs.

Revalue Fully Reserved Assets

You can revalue fully reserved assets that depreciate under all depreciation methods. If you revalue fully reserved assets that depreciate under life-based methods, consider the following additional rules:

Rule	Required?	Description
Life Extension Factor	Yes	When you revalue a fully reserved asset, in most cases you must extend the asset life so its revalued carrying cost can be depreciated over one or more periods. To determine the new asset life, Assets multiplies the original asset life by the life extension factor. The new life is calculated from the date the asset was placed in service. To revalue assets without extending the life of the asset, enter a value type of Price Index or Percent and a life extension factor of 1 on the Create Revaluation page.
Maximum Revaluations	No	You can limit the number of times you can revalue an asset as fully reserved. Assets doesn't revalue a fully reserved asset if the revaluation exceeds the maximum number of times you can revalue an asset as fully reserved.
Life Extension Ceiling	No	The life extension ceiling limits the amount of depreciation you can back out when you revalue fully reserved assets. If your life extension factor is greater than the life extension ceiling, Assets uses the life extension ceiling to calculate the new accumulated depreciation and the depreciation adjustment. It uses the life extension factor to calculate the new asset life, regardless of whether a life extension ceiling exists.

Allow Capital Fund Accounting

Select this option to create accounting entries for capital fund accounting and revalue assets with the net book value method as detailed in the Statement of Recommended Accounting Practice (SORP).