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This article explains why unexpected revaluation figures can appear in the fixed asset note and how revaluation balances should be handled correctly.
Issue
You may notice a revaluation figure appearing in the fixed asset note of your accounts when you are not expecting there to be one, or vice versa.
Cause
This occurs because the revaluation line in the fixed asset note is calculated based on the movement in the specific revaluation code from the prior year to the current year
Example
If you had a balance of £10,000 revaluation in the prior year file, if you wanted to show a revaluation of £5,000 in the current year then the balance in the revaluation account code should be £15,000 as it’s a cumulative balance.
A common mistake is for users to clear down the balance of this revaluation account code to £nil as there’s no revaluation in the year, but this will then pull a negative figure through to the accounts.
Resolution
Ensure that the balance shown in the current year file for revaluations includes any prior period balances too as this should be treated as a cumulative balance. This may mean that any previously cleared down balances will need to be reinstated by way of a journal adjustment.