A company (ABC Ltd.) is engaged in the business of manufacturing of packing materials. It owns heavy plant & machineries and other fixed assets. Recently it has revalued its fixed assets and adjusted the resulted gain or loss with total book value of fixed assets, instead of book value of individual asset.
Whether accounting treatment of revaluation given by ABC Ltd is correct?
Accounting Standard 10, “Accounting for Fixed Assets”, requires that revaluation should be done on the individual asset basis and gain or loss arising on account of such revaluation should also be adjusted with book value of individual asset.
Referring to above para, accounting treatment of revaluation done by ABC Ltd., in this case, is not correct.