| 10.33. | A charity may choose to adopt an accounting policy of revaluing one or more classes of the tangible fixed assets it holds. For example, land and buildings may be revalued but not motor vehicles. If a policy of revaluation is adopted, then all assets within that particular class must be revalued. Buildings of a similar nature, function or use held by the charity constitute a class of tangible fixed assets. |
| 10.34. | In the case of other tangible fixed assets such as motor vehicles, there may be an active second-hand market for the asset, or appropriate indices may exist allowing a valuation to be made with reasonable reliability. |
| 10.35. | If a policy of revaluation is adopted, then charities must: |
| Carry all assets within the relevant class of tangible fixed assets carried at their revalued amount, being its fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. However, if the trustees believe that a reliable market valuation is not possible, then the value in use to the charity or its depreciated replacement cost should be used. |
| Undertake valuations on a regular basis to ensure that the carrying amount does not differ materially from the fair value of the asset at the end of the reporting period. This appraisal is normally undertaken by professionally qualified valuers although it may be carried out internally provided staff have knowledge of the relevant property market. |
| Undertake valuations of land and buildings with sufficient regularity, for example charities may undertake a review on a rolling basis over a five-year period. |
| 10.36. | If a policy of revaluation is adopted, then revaluations and recognised gains and losses must be presented in the accounts as follows: |
| A separate revaluation reserve must be shown within the funds analysis on the balance sheet. |
| Revaluation gains must be recognised as 'Gains on the revaluation of fixed assets' within the SoFA, unless they reverse a charge for impairment that has previously been recognised as a cost within the expenditure headings of the SoFA. |
| Any gain on disposal over the carrying amount must be recognised in 'Other' income within the SoFA. |
| Revaluation losses must be recognised as an expense in the relevant expenditure heading of the SoFA except to the extent to which they offset any previous revaluation gains, in which case the loss is shown in the 'Gains/(losses) on the revaluation of fixed assets' section of the SoFA. |
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