Revaluation

Screen management

This window is composed of:

• A header containing the asset identification information.
   
• The Parameters tab that is used to enter the parameters required for a revaluation, such as the plan and the revaluation method, or, if required, to request the cancellation of the revaluation by ticking the corresponding box.

Management method for the window

The management mode is the same for this window as for all the actions that can be applied to assets.

It is therefore advisable:

1/ First, to enter the parameters linked to the action being implemented.

2/ Then, it is possible:

- Either to directly validate the entry of the new parameters by clicking on . A consistency control is then performed; in the case of an error, a message is displayed, preventing the update of the asset; it is then necessary to correct the parameters in error.

- Or to go through an intermediate stage of control of the parameters entered by clicking . A window is displayed. It can be used to view the result of applying the new parameters to the asset when these parameters are coherent, and also to identify, by means of a colored display, possible lines in error along with the corresponding error messages. The display of the assets in error is not updated with the new parameters; they are displayed with the original parameters.

Click on the button  button to close the control window; the parameter entry window is displayed again, making it possible either to confirm by clicking  if no error has been detected, or to correct any parameter in error.

Note: This stage is part of the management method which is the same for different processing tasks, whether they concern a mass or an individual processing. Its only real usefulness is in mass processings, where it authorizes, if necessary, manual adjustment of the values for certain processed assets. In unit processings, this window can be accessed only in view mode, the entered parameters affecting only one single asset; their adjustment is done directly in the entry window of these parameters.

3/ If the parameters are correct, the  is used to validate their application and to return to the Assets screen in modification mode. The processing is taken into account only after saving the asset.

Header

Tab Setup definition

Revaluation by applying a fixed Coefficient or a Coefficient from the ta

Reminder: A standard revaluation concerns all the plans, except the Chart of accounts and the free plans submitted to the CoA standard or the other standards of a French legislation company.

This revaluation applies:

1/ Either to the values of the fiscal year startor of the period start.It can be implemented:

•  Or by applying a constant coefficient, or variable coefficients or indexes, from a table entered by the user. These coefficients or indexes are applied to the Balance sheet value, the Depreciation totals, the Impairment loss (and Recovery) and the Net value.
   
• Either by taking the asset Market value into account and transferring it to the Balance sheet value with a reset of the depreciation and impairment loss (and recovery) totals to zero: this means that the new asset value will be depreciated over the depreciation residual duration.

2/ Or to the values of the fiscal year end. It can be implemented:

• Or by applying a constant coefficient, or variable coefficients or indexes, from a table entered by the user. These coefficients or indexes are only applied to the fiscal year end Net value. The amounts (basis, depreciation total and charge) are not updated for the current fiscal year. These values are updated, at the depreciation plan level, in the next fiscal year.
   
• Or by taking into account the Market value of the asset. The balance sheet value, the depreciation totals and the net value of the asset are not updated in the current fiscal year. These values are updated, at the depreciation plan level, in the next fiscal year.

Revaluation by application of a fixed Coefficient or a Coefficient from the tabl

• Application of a fixed Coefficient

  - Upon completion of a fiscal year end revaluation, only the fiscal year end net value is updated; no depreciation plan value is updated in the current fiscal year. The impact of the revaluation is seen, following the launch of the calculation processing, in the depreciation plan of the next fiscal year (the amount of the revaluation is displayed in the "Revaluation reserve total").

  - Upon completion of a revaluation of fiscal year start or period start, the values are updated according to the following rules:

Case 1:No depreciation exists prior to the revaluation.

For example :
Period start situation

Revaluated balance sheet value:   1,000
Depreciation total:    350
                                     -------
Accounting net value:     650

Constant coefficient: 1.20

Situation after revaluation:

New revaluated balance sheet value: 1,000 x 1.20 =   1.200
New depreciation total: 350 x 1.20 =  46,550
                                                                        -------
New accounting net value                         780
Period revaluation: 780 - 650                          130

Case 2:Depreciations exist prior to the revaluation.

 Example (with the assumption that the impairment loss increase limit = 0):

Period start situation

Revaluated balance sheet value:          1,000
Actual depreciation total:     350
Depreciation total:                 (50)
Impairment loss increase total:      (30)
Depreciation balance (50 -30):       20
                                             -------
Actual accounting net value:     630

Constant coefficient: 1.20

Situation after revaluation:

Revaluated balance sheet value:               1,000 x 1.20 =   1.200
Depreciation total:                 350 x 1.20 =     420
Revaluated depreciation total:           50 x 1.20 =    (60)
Revaluated increase total:                   30 x 1.20 =    (36)
Revaluated depreciation balance (60 - 36)  20 x 1.20 =    24
                                                                         -------
New accounting net value       630 x 1.20 =   756
Period revaluation:                       756- 630    =  126

• Application of a table coefficient

At the end of the revaluation, the values are updated according to the same rules as the ones applied for constant coefficients. These rules are described above.

The coefficient to be applied is found in the Revaluation coeffs. and indexes table, whose reference is specified in the parameters. The correct access key corresponds to the year and month (if entered) in the Date field chosen as the Date Criterion, and to the value in the field chosen as the Nature Criterion.

 If no coefficient in this table has been loaded in relation to this access key, a blocking message is displayed.

Revaluation by Index

 After the revaluation, the values are updated by applying a coefficient determined based on the indexes found in the Revaluation coeffs. and indexes table, whose reference is specified at the level of the parameters.

This coefficient is determined as follows: Current index / Initial index

- The correct access key for the initial index corresponds to the year and any month (if entered) in the Date field chosen as the Date Criterion and to the value in the field chosen as the Nature criterion.

- The correct access key for the current index corresponds to the year and possibly to the month of the current period (or the current fiscal year if the fiscal year is not divided into periods) and to the value in the field chosen as the Nature Criterion.

  If, in this table, one of the two initial or current indexes are not entered, a blocking message is displayed.

After the coefficient determination, the calculation of the values after revaluation complies with the same rules as those defined for the application of a fixed coefficient. These rules are described above.

Revaluation by Market Value

The displayed Market valueis taken from the value used at the level of the Market valueoption window in the Fixed assetsmanagement function. It can be modified.

- Upon completion of a fiscal year end revaluation, no depreciation plan value is updated in the current fiscal year. The impact of the revaluation is seen, following the launch of the calculation processing, in the depreciation plan of the next fiscal year (the amount of the revaluation is displayed in the "Revaluation reserve total").

- Upon completion of a revaluation of fiscal year start or period start, the values are updated according to the following rules:

Example 1 (period start revaluation): No depreciation exists prior to the revaluation.

Period start situation

Revaluated balance sheet value:   1,000
Depreciation total:   350
                                     -------
Accounting net value:    650

Market value: 700

Situation after revaluation:

New revaluated balance sheet value:  700
New depreciation total:   0
                                                -------
New actual accounting NV:     700
Period revaluation: 700 - 650  = 50

 Example 2 (period start revaluation): There are depreciations prior to the revaluation (with the assumption that the impairment loss increase limit = 0):

Period start situation

Revaluated balance sheet value:           1,000
Actual depreciation total:      350
Depreciation total:                  (50)
Impairment loss increase total:        (30)
Depreciation balance (50 -30):         20
                                               -------
Actual accounting net value:     630

Market value: 700

Situation after revaluation:

New revaluated balance sheet value:      700
New depreciation total:       0
Depreciation total:                          0
Impairment loss increase total:               0
                                                     -------
New actual accounting NV:           700
Period revaluation:   700- 630    =  70

Example 3 (fiscal year end revaluation).

Period start situation

Revaluated balance sheet value: 1,000
Depreciation total: 350
-------
Net value: 650

---> Market value: 700

Situation in the current fiscal year, after revaluation:

• The situation remains unchanged

Revaluated balance sheet value: 1,000
Depreciation total: 350
-------
Net value: 650

• The amount of the revaluation (50) and the information of the revaluation: date (31/12/XXXX), effective date (fiscal year end), type (Market value) are displayed in the depreciation plan of the last period of the fiscal year.

New revaluated balance sheet value: 700
New depreciation total: 0
-------
New actual NV: 700

• The amount of the revaluation is recorded in the "Revaluation reserve total" in the first period of the fiscal year.

Accounting free revaluation

Reminder: a standard revaluation only concerns the Chart of accounts and the free plans submitted to the CoA standard or the other standards of a French legislation company.

This revaluation applies only to the values of the fiscal year start. It can be implemented:

• Or by applying a constant coefficient, or variable coefficients or indexes, from a table entered by the user. These coefficients or indexes are applied to the Net value. The revaluation variance is then deferred on the balance sheet value.
   
• Or by taking the Market value of the asset into account and transferring it to the Net value. The revaluation variance is then deferred on the balance sheet value. This means that the new asset value will be depreciated over the depreciation residual duration.

Irrespective of the method applied (taking the market value into account or applying a coefficient), the impact on the revaluation is the following:

• The former totals are not updated, only the depreciation basis and the net value are updated.
• The revaluation on the Chart of accounts is automatically deferred on the Fiscal plan (with a consequence on the Exceptional depreciation) and, if managed, on the Minimum plan (with a consequence on the Deferred depreciation).

Example of revaluation with application of a coefficient: 1.30

Fiscal year start situation before revaluation:

Chart of accounts
Revaluated balance sheet value: 1,000
Depreciation total: 200
                                    ------
Accounting net value:  800

Fiscal plan
Revaluated balance sheet value: 1,000
Depreciation total:  450
                                     ------
Accounting net value:        550

Book vs. Tax provision: 450 - 200 = 250

Situation after revaluation:

Chart of accounts
Actual accounting net value: 800 x 1.30 = 1 040
Revaluation variance: 800 - 1,040 = 240
Revaluated balance sheet value:  1,000 - 240  = 1,240
Depreciation total (unchanged): 200
Depreciation expense (calculated from the revaluated balance sheet value): 260


Fiscal plan
Revaluated fiscal net value = revaluated net value: 1,040
Revaluated fiscal balance sheet value = Revaluated balance sheet value: 1,240
Depreciation total before revaluation (unchanged):  450
Depreciation expense (calculated from the revaluated balance sheet value): 468
                                    
Book vs. Tax provision: 468 - 260 = 208
Book vs. Tax provision reversal (linked to the revaluation): 250

Description of the revaluation/revaluation cancellation processing

1/ Revaluation processing

The revaluation processing carries out the following operations:

• Update, according to the chosen revaluation method (Coefficient, Index, Market value), of the values in the depreciation plan concerned by the revaluation.
  This update is performed with respect to the procedures described above.
  See below for some examples of the consequences on the depreciation schedule according to the selected implementation date (beginning of the current fiscal year or of the current period).
   
• Generation of a Revaluation event (FASREEVAL).
  - The accounting effectivedate is recorded in the EVTDAT field; it receives the highest date among the following dates: date displayed in the Revaluation date and Deprec. start date fields.
  - The accounting effective date is recorded in the CPTDATINT field; it receives the highest date of the following dates: Start date of the current period, Depreciation start date.
   
  - In the case of a fiscal year end revaluation, the values attached to the revaluation are stored in the event even if the effect on the depreciation plan is seen only in the next fiscal year. Indeed, the posting of the revaluation is performed on the last period of the current fiscal year.
   
  The user can view the events in the Events journal window that can be accessed from the Other info tab of the management function for Fixed assets.
   
• Archiving, in a dedicated table (DEPRECARC) of the depreciation plan before revaluation, if the company is submitted to the French legislation (FRA). It can be viewed in the Archived plan tab, accessible from the inquiry of the event detail.
   
• Generation of the accounting entry used to post the event, if the Entry type pertaining to this event is set up for an immediate posting of the event.

In case of revaluation by Market value:

• Impact of this value, when it is updated, on each plan already carrying a Market value, providing that the start date of the period (or of the fiscal year, if the fiscal year is not divided into periods) is equal to the period (or fiscal year) start date for the re-evaluated plan.
• Loading the name of the expert who evaluated the asset and the revaluation reason.
  
  This information appears in the Market value option window, in the "financial assets" management function.
• The revaluation by Market value of an asset depreciated according to a non-residual method leads, in this plan, to a change in the depreciation method that will automatically take the Equivalent residual method value. This is used to process the revaluation in a long-term fashion, by depreciating the new net value of the asset for the duration of the residual depreciation.
  

Examples of depreciation plans after revaluation by market value

Example 1: Revaluation by Market value with implementation date at current fiscal year start

- Depreciation start date: 01/07/2004 (i.e. 184 holding days)
- Asset value: 10,000
- Method: linear
- Duration: 5 years
- Depreciation total on FY-1 end: 3005.46
- Current fiscal year: [01/01/2006 - 31/12/2006]
- Current period: [4/1/2006 - 6/30/2006]
- Revaluation at market value to 8,000

(1) The revaluation recorded in the current period [01/04/06 - 30/06/06] takes effect on 01/01/2006. This has the following consequences:
- the recovery of the depreciations already posted: 3,005.46 for previous FYs
- the update of an asset gross value at 01/01/2006: 8,000 instead of 10,000
- the beginning of a new depreciation plan, with 8 000 as depreciation value, and the residual value i.e. 1,187 days of the [01/04/06 - 06/30/2009] period, as depreciation duration.

(2) the new charge of 2006 fiscal year equals to: 8,000 x (365 days / 1,277 days) = 2,286.61

(3) The depreciation expense for the current period is:  2,286.61 x (181 days / 365 days) - 493.15 = 640.76
181 days corresponds to the [01/01/06 - 30/06/2006] period, since the effective date of the revaluation is 01/01/06. The charge of the current fiscal year includes the adjustment of the previous periods depreciation totals (- 493.15).

Example 2: Revaluation by Market value with the implementation date at current period start

- Depreciation start date: 01/07/2004 (i.e. 184 holding days)
- Asset value: 10,000
- Method: linear
- Duration: 5 years
- Depreciation total on FY-1 end: 3005.46
- Current fiscal year: [01/01/2006 - 31/12/2006]
- Current period: [4/1/2006 - 6/30/2006]
- Revaluation at market value to 8,000

(1) The revaluation recorded in the current period [01/04/06 - 30/06/06] takes effect at 01/04/2006. This has the following consequences:
- the recovery of the depreciations already posted: 3,005.46 for previous FYs and 493.15 for the FY
- the update of an asset gross value at 01/04/06: 8,000 instead of 10,000
- the beginning of a new depreciation plan, with 8,000 as depreciation value, and the residual value i.e. 1,187 days of the [01/04/06 - 30/06/2009] period, as depreciation duration.

(2) the new charge of 2006 fiscal year equals to: 8,000 x (275 days / 1,187 days) = 1,853.41

(3) The depreciation expense for the current period is:  1853.41 x (91 days / 275 days) = 613.31
91 days corresponds to the [01/04/2006 - 30/06/2006] period, since the effective date of the revaluation is 01/04/2006.

Examples of depreciation plans after revaluation by Coefficient

Example 3: : Revaluation by Coefficientwith an effective date at the start of the current fiscal year.

- Depreciation start date: 01/07/2004 (i.e. 184 holding days)
- Asset value: 10,000
- Method: linear
- Duration: 5 years
- Depreciation total on FY-1 end: 3005.46
- Current fiscal year: [01/01/2006 - 31/12/2006]
- Current period: [4/1/2006 - 6/30/2006]
- Revaluation by a coefficient of 1.20

(1) The revaluation recorded in the current period [01/04/06 - 30/06/06] takes effect on 01/01/2006. This has the following consequences:
- the revaluation of the depreciation total at the end of E-1: 3,005.46 x 1.2 =   3,606.55
- the revaluation of the asset gross value on 01/01/2006: 10,000 x 1.2 =   12,000
- the continuing depreciation plan taking into account these revaluated values, while keeping, however, the depreciation method and adjusting in the current period the depreciation total for the closed periods of FY E.

(2) the new charge of 2006 fiscal year equals to: 12,000 x 20% =   2,400.00

(3) The depreciation expense for the current period is:  2,400.00 x (181 days / 365 days) - 493.15 = 696.99
181 days corresponds to the [01/01/06 - 30/06/2006] period, since the effective date of the revaluation is 01/01/06.

Example 4: : Revaluation by Coefficientwith an effective date at start of the current period

- Depreciation start date: 01/07/2004 (i.e. 184 holding days)
- Asset value: 10,000
- Method: linear
- Duration: 5 years
- Depreciation total on FY-1 end: 3005.46
- Current fiscal year: [01/01/2006 - 31/12/2006]
- Current period: [4/1/2006 - 6/30/2006]
- Revaluation by a coefficient of 1.20

(1) The revaluation recorded in the current period [01/04/06 - 30/06/06] takes effect at 01/04/2006. This has the following consequences:
- the revaluation of the depreciation total at the end of E-1: 3,005.46 x 1.2 =   3,606.55
- the revaluation of the depreciation total for the closed periods of E: 493.15 x 1.2 =   591.78
- the revaluation of the asset gross value at 01/04/2006: 10,000 x 1.2 = 12 000
- the continuing depreciation plan taking into account these revaluated values.

(2) the new charge of 2006 fiscal year equals to: 12,000 x 20% =   2,400.00

(3) The depreciation expense for the current period is:  2,400.00 x (181 days / 365 days) - 591.78 = 598.36
At 30/06/2006, the depreciation total for the closed periods is thus: 591.78 (quarter charge 1 revaluated) + 598.36 (quarter charge 2) = 1,190.14.

Example of negative revaluation

A revaluation is negative when the market value entered is smaller than the net value of the asset, or when a revaluation is performed by applying a coefficient, if this coefficient is smaller than 1.

(1) The positive revaluation amount is credited as own capital, under the heading Revaluation variances (Provision).
(2) The nevative revaluation amount is credited as own capital, under the heading Revaluation variances (Reversal). The displayed amount is limited to the balance of the revaluation variances. The balance, posted as Charges to the profit and loss account, is stored in the RVADEVCHG field of the EFASREEVAL table.
(3) The positive revaluation amount is posted to the profit and loss account (Revenue) because it compensates for any negative revaluation, previously posted to the profit and loss account.

 This example does not take into account the revaluation reversal transferred to the profit and loss account, and not allocated as the asset is being depreciated. The amount of this reversal corresponds to the difference between the depreciation based on the revalued book value of the asset and the depreciation based on its initial cost.

Example of Accounting free revaluation

- Asset value: 1,000
- Depreciation start date: 01/01/N
- Mode: linear on the Charts of accounts; declining on the Fiscal plan
- Duration: 5 years
- In N: accounting charge of 200 - fiscal charge of 450 - exceptional provision: 250
- In N+1, its net value of 800 is revaluated at 1,040.
- The revaluation variance has a value of 240 (1,040 - 800)
- The accounts depreciation basis of 1,000 is increased by the value of the revaluation variance (240), resulting in a revaluated basis of 1,240.
- The accounts depreciation is calculated from the new net value of 1,040, in residual mode, resulting in an accounts depreciation of 260/year.

Accounts depreciation

Finance depreciation

(1) Fiscal basis = accounting basis
(2) Book vs. Tax reversal noticed in N
(3) Fiscal net value = net value
(4) The total N+2 takes into account the Book vs. Tax provision reversal N+1 (450 + 468 - 250 = 668)

Book vs Tax depreciation

(1) Book vs. Tax provision reversal linked to the revaluation

2/ Revaluation cancellation processing

Reminder: an asset cannot be revaluated if it has already been subject to a revaluation in the same plan and in the same period. To carry out a new revaluation, cancelling the previous revaluation is necessary before a new one can be launched.

The cancellation process for the revaluation leads to:

• The re-assignment of the pre-revaluation values (i.e. their values for the previous period) for the following fields updated by the revaluation process:
  
  - Revaluated balance sheet value
  - Depreciation total
  - Accounting net value
  - Period start depreciation total
  - Period start impairment loss increase total
  - Period start depreciation balance
  
  Note: the Market value entered during the revaluation processing is kept.
   
• The blanking of the following fields:
   
  - Issue date
  - Evaluator
  - Comment
   
• The resetting of the following field to zero: Period revaluation
   
• The automatic re-selection of the original method if the revaluation has led to a mandatory change in the depreciation method to a residual equivalent method. 
   
• The generation of a Revaluation cancellation event (FASREEVAL). (The revaluation and revaluation cancellation events have the same contents; only the event type is used to distinguish them). 
  The user can view the events in the Event journal window that can be accessed from the Other info tab of the Assets management function.

Specific Buttons

Error messages

In addition to the generic error messages, the following messages can appear during the entry :

Coefficient/index not found in the reference table entered

Occurrence not found in the table of revaluation coefficients/indexes. The access key corresponds to the year and any month in the Date field chosen as the Date Criterion and to the value in the field chosen as the Nature Criterion (Group or Accounting code). Please check the setup of the Revaluation Coefficients / Indexes table.

Tables used

Refer to documentation Implementation