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Sorry but since i have a confusion,i’m asking the same question, as reply to the post has been stopped.
As u said a company can do revaluation of their assets whenever they want. My point is- this revaluation of assets will result in showing the assets in SOFP at fair value. But on the other hand under going concern concept it states , assets should not be valued at break up value unless the business is liquidating in next 12 months. So if a business do revaluation without any intention of liquidating in next 12 months , So how is this possible , as two contradicts to each other. at one point revaluation is allowed while on the other hand going concern concept restrict to use fair value (only when liquidating the company)
Kindly plz if u can clear out the confusion.
Thank you.My answer is the same as before 🙂
Unless a business intends to liquidate then we should treat the business as a going concern.
A business can revalue whenever it wants, to the ‘true’ value of the assets, but they are a going concern then the ‘true’ value will not be the break-up value. The values have to be determined by professional valuers and no business will want to revalue downwards to the extent of the break-up values. Revaluations will occur when the ‘true’ value of an asset is higher than the book/carrying value.
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