Financial Education

Under U.S. GAAP, assets must be carried at historical cost, less any charges for depreciation, amortization and impairment. Under no circumstances can assets be revalued to a higher value.

International Standards permit upward revaluation of assets if the fair value of the assets increases. Typically the new value is based on an appraisal.

Upward revaluations can affect comparisons between companies that have revalued and those that have not. Further, upward revaluation results in more favorable leverage and solvency ratios. As a result, investors may wish to adjust the financial statements to remove the impact of upward revaluation.

For more information, see all articles on: Accounting, Financial Statement Analysis, Fundamental Analysis, Ratio Analysis

See also:

Accounting for Property, Plant and Equipment: Differences Between US GAAP and International Accounting Standards

Asset Impairment Charges

How Value and Growth Stocks Deliver Returns to Investors

Hedge Fund Benchmarks

Current Assets