When a company carries land, buildings or other tangible fixed assets at a valuation rather than at cost, the accounts must also show what those assets would have been carried at under the historical cost model, and how the revaluation reserve moved. In Tax Optimiser this is a section of the tangible fixed assets note.
What this section shows
Up to two tables, printed under the tangible fixed assets table:
- Historical cost comparison – the cost, the accumulated depreciation and the net book value the revalued assets would have had under the historical cost model, for this year and last.
- Movement in the revaluation reserve in the year – the opening balance, the movement in the year and the closing balance.
A table only prints when it has figures. The section is part of FRS 102 Section 1A accounts; it is not available in FRS 105 micro-entity accounts, which do not permit revaluation.
Where the figures come from
You type in the historical cost and the accumulated depreciation based on it, for both years. Enter the depreciation as a positive figure; the net book value is worked out for you.
The revaluation reserve comes from the trial balance, from the Revaluation reserve account, so the closing balance always agrees with the balance sheet. Last year's balance is this year's opening balance.
Completing the section in Tax Optimiser
Open the period, choose Accounts, then Notes in the left Actions menu. Select Tangible fixed assets in the list.
- Set Show this note in the accounts to Yes.
- In the Revalued assets: historical cost (figures) section, enter the historical cost and the accumulated depreciation for both years.
- In the Additional note for tangible fixed assets section, click Use Template and choose Basis and year of valuation, then add Revaluation reserve: tax treatment beneath it, or type your own wording.
- Click Save changes to save the note and rebuild the accounts preview.
Wording templates
- Basis and year of valuation – states when the asset was valued, by whom and on what basis. You are asked for {{AssetDescription}}, {{ValuationDate}}, {{ValuerName}}, {{ValuerQualification}} and {{ValuationBasis}}.
- Revaluation reserve: tax treatment – states that the reserve is not distributable and the deferred tax provided on the surplus. You are asked for {{DeferredTaxAmount}}.
- Interest capitalised – for an asset whose cost includes capitalised interest. You are asked for {{AssetDescription}}, {{CapitalisedInterest}} and {{CapitalisedInYear}}.
What the section does not cover
- The movement in the reserve prints as one figure. If it is made up of a revaluation surplus, a transfer to the profit and loss account and deferred tax, explain the parts in the additional note.
- Deferred tax on a revaluation is entered in the deferred taxation note.
- Investment property has its own note and is not revalued through the revaluation reserve: see the investment property note.
Frequently asked questions
Do small companies have to show historical cost figures for revalued assets?
Yes. Where fixed assets are included at a valuation, the notes must give the comparable amounts under the historical cost accounting rules, together with the year and basis of the valuation.
Why can't I type the revaluation reserve figures?
They come from the Revaluation reserve account in the trial balance, so the note cannot disagree with the balance sheet. Correct the trial balance if the figure is wrong.
The historical cost table is not printing. Why?
It prints only when a historical cost or depreciation figure has been entered. Check that the tangible fixed assets note is switched on and the figures have been saved.