Revaluation reserve in unaudited accounts

[anonymous-user]

Balance sheet of a small ltd

Last year accounts show tangible assets £1m

This year show £5m

£4m shown as revaluation reserve

How much faith would you, as a would be investor in the company, have in that £4m?

[hajaba123]

Anything between zero faith and quite a lot. If it's a property asset that hadn't been valued for many years and there's a decent professional valuation to back it up then some confidence. The follow up question would be why the re valuation at this particular time

[Eric Mc]

This usually relates to land and buildings which have been held as Fixed Assets by the company for a number of years. Every so often these assets may be revalued (usually upwards) to reflect their true current market value.

Under double entry rules, an increase in the value of fixed assets is matched by a corresponding increase to (or creation of) a revaluation reserve.

Rules regarding such revaluations are being considerably tightened up with the introduction of FRS102 which applies to all company accounting periods starting from 1 January 2016.

[anonymous-user]

Thanks

Will dig a bit more now I know where to look!