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The increase of asset revaluation amount
Dr Asset account with the increased value
Cr Revaluation Reserve account
Example if the carry value of an asset is $30,000 and was revalued to let say $32,000. The increase value is $2,000 thus with all other things being equal. Therefore the asset will be debited with $2,000 and Revaluation Reserve will be credited with $2,000.
Upward (downward) revaluation is not considered a normal gain (loss) and is not recorded in income statement rather it is directly credited (depit) to an equity account called revaluation surplus. Revaluation surplus holds all the upward (downward) revaluations of a company's assets until those assets are disposed of.
Revaluation of fixed assets is the process of increasing or decreasing their carrying value in case of major changes in fair market value of the fixed asset. Internation Financial Reporting Standards (IFRS) require fixed assets to be initially recorded at cost but they allow two models for subsequent accounting for fixed assets, namely the cost model and the revaluation model.
