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Example: Revaluation of Assets Video Lecture | Accountancy Class 12 - Commerce

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FAQs on Example: Revaluation of Assets Video Lecture - Accountancy Class 12 - Commerce

1. What is asset revaluation?
Ans. Asset revaluation refers to the process of reassessing the value of a company's assets, such as property, equipment, or investments. This is done to reflect their current market value, rather than their original cost.
2. Why would a company need to revalue its assets?
Ans. There are several reasons why a company may need to revalue its assets. Some common reasons include changes in market conditions, significant fluctuations in asset values, mergers or acquisitions, or compliance with accounting standards. Revaluing assets helps ensure that a company's financial statements reflect their true worth.
3. How is asset revaluation done?
Ans. Asset revaluation is typically done by engaging the services of a professional valuer or appraiser who assesses the value of the assets. The valuer considers various factors such as market conditions, depreciation, and any changes in the asset's usefulness or condition. The new value is then recorded in the company's financial statements.
4. What are the potential impacts of asset revaluation on a company's financial statements?
Ans. Asset revaluation can have several impacts on a company's financial statements. Firstly, it can affect the balance sheet by increasing or decreasing the value of the assets. This, in turn, can impact the company's equity and overall financial position. Secondly, it can also affect the income statement through changes in depreciation expenses and potential gains or losses on the revaluation.
5. Is asset revaluation a mandatory requirement for all companies?
Ans. Asset revaluation is not a mandatory requirement for all companies. The need for asset revaluation depends on factors like the accounting standards followed, legal requirements, or specific circumstances. However, it is considered good practice for companies to periodically review and reassess the value of their assets to ensure accurate financial reporting.
47 videos|109 docs|56 tests

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