In finance, a revaluation of fixed assets is a technique that may be required to accurately describe the true value of the capital goods a business owns. This should be distinguished from planned depreciation, where the recorded decline in value of an asset is tied to its age.
Fixed assets are held by an enterprise for the purpose of producing goods or rendering services, as opposed to being held for resale in the normal course of business. For example, machines, buildings, patents or licenses can be fixed assets of a business.
The purpose of a revaluation is to bring into the books the fair market value of fixed assets. This may be helpful in order to decide whether to invest in another business. If a company wants to sell one of its assets, it is revalued in preparation for sales negotiations.
Read more about Revaluation Of Fixed Assets: Reasons For Revaluation, Upward Revaluation, Downward Revaluation, Successive Revaluations
Famous quotes containing the word fixed:
“Nothing stands out so conspicuously, or remains so firmly fixed in the memory, as something which you have blundered.”
—Marcus Tullius Cicero (106–43 B.C.)