- If there is an indicator that the book value of an asset is greater than the recoverable value, than assessment of the recoverable value is made, and if the suspicion is correct, then the asset has an impairment loss expense and accumulated impairment loss contra-asset recorded. The accumulated depreciation can be renamed accumulated depreciation and impairment loss in order to summarise negative changes to asset value.
- assets held at historical acquisition cost are following the cost model until a revaluation is made, and then they are in the revaluation model, and a revaluation surplus equity account is created for the asset (assuming the asset is going to be re-valued higher). The asset is debited for the surplus and the revaluation surplus equity account is credited for the surplus. Any accumulated depreciation should be written-back to the asset, just as in disposal, to come to the new re-valued asset value, with zero accumulated depreciation.
For downwards re-valuation, it is similiar to asset impairment, except the expense of the lost amount from re-valuation is not recorded against accumulated depreciation and impairment loss contra-account, but against the asset, since previous accumulated depreciation and impairment loss will be written back in the process of revaluation.
- A downgrade from either impairment testing or revaluation should be credited to revaluation surplus until it reaches zero. Then revert to either crediting the asset account if doing revaluation, or crediting the impairment loss contra account ( sometimes combined with accumulated depreciation contra-account) if doing impairment assessment.
- depreciation and impairment losses still apply as usual, in the revaluation model, after revaluation has been made.