The iterate revaluation method is used to revaluate fixed assets that are composed of individual components. In this method, the fixed asset revaluation transaction does not revalue the individual components in proportion to their original value, but considers each component included in the fixed asset structure at its value as of the time of the revaluation. Furthermore, the proportional distribution method remains in force.
When using the iterate depreciation method, a table is created to calculate the value of all revaluation transactions and major refurbishments for each individual component after acquisition. The fixed asset valuation is derived from these calculations, as shown in the following table.
|
Revaluation amount, Adj(i) |
Fixed asset balance value before revaluation, Sbal(i) |
Original component cost, Ssrc(i) |
Cost after revaluation, Sdst(i) |
|
|---|---|---|---|---|
|
1 |
1500 |
3000 |
2000 |
Sdst(i) = Ssrc(i) x (1+ Adj(i)/ Sbal(i)) = 3000 |
|
2 |
2000 |
5500* |
Ssrc(i) = Sdst(i-1) = 3000 |
Sdst(i) = Ssrc(i) x (1+ Adj(i)/ Sbal(i)) = 4090.91 |
* The calculated fixed asset balance value includes the fixed asset revaluation amount caused by a partial disassembly of the asset
Where, Adj(i) = the cost of current revaluation transaction.
S bal(i)) = the fixed asset balance value before revaluation, calculated as the sum of all acquisition transactions before the current revaluation transaction, plus the sum of all previous revaluation transactions, without considering the current transaction and major refurbishment transactions, less the prior partial fixed asset disassembly transactions.
S src(i) = the original component cost , which is initialized by the cost of acquiring the components for a first revaluation. For example, if 10 units were acquired and 5 are to be withdrawn, this sum contains the original cost value of 5 units. For all subsequent transactions, this is initialized from the S dst(i-1) value.
The calculated value is rounded off in compliance with the configuration of the fixed assets module.
After revaluation transaction 1, the component balance is 3000, and after revaluation transaction 2 it is 4090.91.
Component
value after revaluation
The calculation of the added component depreciation is equal to the balance value calculation. The depreciation revaluation and depreciation accrual transactions are, in this case, identical to the revaluation transaction.
A table is created for every component withdrawn from the fixed asset composition. The lines of the table include all depreciation accrual and depreciation revaluation transactions completed after acquisition, except for depreciation revaluation transactions triggered by disassembly transactions, as shown in the following table.
|
Depreciation (or revaluation) amount, Acq(i) |
The fixed asset balance value at the time of depreciation/depreciation revaluation |
Component cost, Sdst(i) |
Accumulated component depreciation |
|
|---|---|---|---|---|
|
1 |
300 – depreciation |
4500 |
3000 |
A(i) = A(i-1) + Sdst(i) x Acq(i)/ Sbal = 200 |
|
2 |
700 – depreciation |
7000 |
3000 |
A(i) = A(i-1) + Sdst(i) x Acq(i)/ Sbal = 500 |
|
3 |
349.21 – revaluation |
5500 |
3000 |
A(i) = A(i-1) + Sdst(i) x Acq(i)/ Sbal = 690.48 |
For the first depreciation line, the value A(i-1) is equal to 0.
The accumulated component depreciation calculation is based on the calculated component balance value. The balance value calculation can be combined with the depreciation calculation, and a general transactions table can be created and the necessary steps followed depending on the type of the next transaction.
The component depreciated cost is calculated as the difference between the component balance value obtained and the accumulated component depreciation.
A partial take-down transaction has an indirect effect on the fixed asset balance. A partial take-down transaction creates value and depreciation revaluation transactions which, in turn, are already considered in the fixed asset balance.
As a result of the calculation, a balance value, balance depreciation, and market value equal to the depreciated cost are created.
