What is the revaluation difference?
So theRevaluation constitutes thedifference between the revalued values and the net values previously recognised. The materialization of this difference is done by an accounting entry, directly, and affecting the liabilities of the balance sheets in the equity of the company.
Free revaluation therefore has the advantage of increasing equity and therefore the value of the company. By increasing the value of depreciable assets, this also implies an increase in depreciation allowances for future years (and consequently a tax saving, see the paragraph below).
Free revaluation is an accounting mechanism to strengthen equity by carrying the value of fixed assets on a company’s balance sheet to their true market value. This article was published a year ago, so it may be out of date.
The revaluation of fixed assets is an exception to the principle of accounting at historical cost (or monetary nominalism). As soon as it is implemented, it must relate to all tangible and financial fixed assets (depreciable or not), without the possibility of choice in favor of certain assets.
Their real value thus diverges from their net book value. In order to respect the principle of faithful image, the Commercial Code and the General Chart of Accounts have introduced the notion of free revaluation. Compta-Facile gives you details of the accounting entries for the free revaluation of fixed assets.