In accounting, fixed assets come at historical cost. Over time, the value of assets changes, therefore, for the valuation of fixed assets, replacement or residual values are used.
Fixed assets are used for a long time and their cost can significantly affect the indicators of the financial condition of the enterprise. However, due to inflationary processes and wear and tear, their book value and real value, as a rule, do not coincide.
Valuation of fixed assets is a monetary expression of the value in which they are reflected in accounting. There are three types of cost at which fixed are valued, these are:
- Initial cost;
- Current (replacement) cost;
- Residual value.
The initial cost is the sum of the actual costs of the organization for the acquisition, construction and manufacture of fixed assets, excluding VAT and other recoverable taxes.
Initial cost of fixed assets is subject to change in accounting in cases of completion, retrofitting, reconstruction, modernization, partial liquidation and revaluation of fixed assets.
Residual value is the difference between the original cost and the accrued depreciation.
Replacement cost – the cost of fixed assets in modern conditions, at modern prices and technology, this is the cost at which fixed assets are valued after revaluation.
When making a decision on revaluation, it should be borne in mind that in the future such items should be revalued regularly so that the value of the revalued fixed assets does not differ materially from the current (replacement) value.
Valuation of fixed assets includes a wide range of activities, including the determination of the value of fixed assets of an enterprise for the purposes of accounting and analysis, economic calculations and forecasts, as well as the formation of generalizing industry and national economic indicators.
If you know the value of your revaluated fixed assets, you can make clearer explanations about your company’s assets. In this way, you will not make mistakes while making decisions about your institution.
Valuation of fixed assets is a very important work and the experts of CAC experts are aware of the difficulty of the work and the required professionalism. That’s why CAC work with experts who are suitable, provide best services and strive to ensure that the resulting works are at the best level. We assure that you can count on CAC for these services.
The increasingly complex and changing reality of the world of properties and fixed assets demands that the clients be provided with the highest level of valuations. The experts of CAC have complete knowledge about the market and the management of national and international valuation methodologies under market, income and cost approaches which in turn qualifies them to be relied upon.
The services offered by CAC focus on providing reliable and comprehensive fixed asset solutions. They have a multidisciplinary team of specialists capable of providing clients with the guidance and experience necessary for the management and control of their assets, in order to achieve greater efficiency and competitiveness.