Revaluation Method of Depreciation (Cambridge (CIE) AS Accounting): Revision Note
Exam code: 9706
Revaluation depreciation
What is the revaluation method of depreciation?
The revaluation method of depreciation involves performing a valuation of assets at the end of the financial year to determine the reduction in value
This method is commonly used for assets of smaller value
Such as loose tools, packing cases
How do I calculate depreciation using the revaluation method?
A revaluation of the non-current asset will be given in the question
To calculate the depreciation charge for the year:
start with the value at the start of the year
add any purchases of that type of non-current asset
subtract the revaluation amount at the end of the year
Worked Example
Abi's loose tools were values at $5 000 on 1 March 2023. On 1 August 2023, Abi purchased additional loose tools costing $1 500.
On 29 February 2024, at the end of the financial year, the fixtures and fittings were valued at $4 650.
Calculate the depreciation charged for the financial year ending on 29 February 2024.
Answer:
Value at the start of the year is $5 000
Purchases during the year totalled $1 500
Value after the revaluation is $4 650
Calculate the depreciation charge
Add the purchases to the starting value
Subtract the revaluation
$5 000 + $1 500 - $4 650 = $1 850
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