hat does the Revaluation reserves on the equity section of the balance sheet represent?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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what does the Revaluation reserves on the equity section of the balance sheet represent?

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Equity

Equity is what the business owes to its owners. Equity is derived by deducting total liabilities from the total assets. It therefore represents the residual interest in the business that belongs to the owners.

Equity is usually presented in the statement of financial position under the following categories:

  • Share capital represents the amount invested by the owners in the entity
  • Retained Earnings comprises the total net profit or loss retained in the business after distribution to the owners in the form of dividends.
  • Revaluation Reserve contains the net surplus of any upward revaluation of property, plant and equipment recognized directly in equity.

                                  or

   Revaluation reserve is an accounting term used when a company creates a line item on its balance sheet for the           purpose of maintaining a reserve account tied to certain assets. This line item can be used when a                                     revaluation assessment finds that the carrying value of the asset has changed.

                                   or

  Revaluation reserve –revaluation reserve arising out of revaluing the assets of the company.

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