Definition of Revaluation

Revaluation is called the positive difference between the fair market value of an asset and its original cost, less the depreciación, which is recognized in equity and, with it, the income statement of a company is not affected.

En accounting terms, the revaluations adhere to a series of objective evaluations of constant and substantial increases in the value and are governed by the rules contained in the General Accounting Plan.

To better understand the concept of revaluation and its characteristics, it is essential to know that the values ​​of all the assets of a company must be recognized and documented. Over time, the value of certain assets may change as a result of fluctuations in market value. For this reason, when there is an increase in the value of assets in the market it is necessary to carry out an evaluation; If the asset were to decrease in value, a devaluación.

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