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.

What happens when you revalue an asset?

The revaluation model gives a business the option of carrying a fixed asset at its revalued amount. Subsequent to the revaluation, the amount carried on the books is the asset's fair value, less subsequent accumulated depreciation and accumulated impairment losses.

Why do we revalue?

Reasons for revaluation

Prepare for the sale of an asset to another company. Negotiate a fair price before merging with, or being acquired by, another company. ... Ensure enough funds are available to replace fixed assets at the end of their useful lives.