Revaluation Of Fixed Assets Research Articles

Motives for Reporting Fixed Assets at Revalued Amount: Evidence from a Developing Economy

The purpose of this study is to examine firms’ motives for reporting fixed assets at revalued amount. The study analysed 30 manufacturing firms listed in Colombo Stock Exchange (CSE) for a period of two years from 2012 to 2013, employing Mann–Whitney U test and bivariate and multivariate logistic regression. It is found that manufacturing firms tend to report their property, plant and equipment (PP&E) at revalued amount, when land and building dominates their fixed assets, and firms whose PP&E is dominated by plant and machinery are inclined towards reporting fixed assets at historical cost. However, all such other factors investigated as firm size, carrying amount of PP&E ( ppe), intensity of PP&E ( ippe), returns on total assets ( roa) and return on equity ( roe) fail to explain the accounting choice between cost and revaluation models. The probability for a revaluation to occur, on the other hand, is found to be significantly and positively associated to financial leverage, indicating that highly levered manufacturing firms tend to revalue their assets, may be with the expectation of creating possibilities for additional borrowing. Further, no other variables investigated associate with the probability for a revaluation to occur, though prior researches support such association. Findings reveal that fixed assets revaluation motives may be characterized by the nature of fixed assets and their market dynamics characterized by the nature of economy in which firms operate. Findings also suggest that fair value accounting is relevant to manufacturers with high levels of land and building within their asset structure. Fixed assets revaluation motives may differ across countries which should accordingly be valued by financial analyst and investors. Future research should focus on value relevance of revaluation decision of firms in developing countries. Revaluation decisions should be analysed as first-time revaluation and frequency of subsequent revaluations. This is the first study in Sri Lanka reporting the evidence for fixed asset revaluation motives.

THE IMPORTANCE OF TANGIBLE FIXED-ASSETS REVALUATION: A COMPARISON BETWEEN ROMANIAN ACCOUNTING REGULATIONS AND THE IPSAS 17 ‘PROPERTY, PLANT AND EQUIPMENT’

The purpose of a tangible fixed-assets revaluation is to establish true values for assets and a genuine picture of the financial position and the result of public institutions. This article presents the legislation needed to implement international provisions regarding the accounting system of public institutions, especially those concerning the revaluation of tangible fixed assets. It contains a comparison between the national regulations and guidelines of the International Public Sector Accounting Standard for tangible fixed assets. It highlights the convergences and divergences regarding the accounting treatment for determining the initial value of tangible fixed assets, the setting out of the reassessed value, the accounting treatment applied to the revaluation results, and the achievement of a revaluation surplus. It also describes the manner in which the revaluation of tangible fixed assets can influence the financial and patrimonial position of a public institution

The Effect of Leverage, Size, Liquidity, Operating Cash Flow on Fixed Asset Revaluation

This study tries to prove empirically the effect of leverage, size, liquidity and operating cash flows on the revaluation of fixed assets. It used a sample of all non-financial companies, which revalued assets in the periode of 2012-2015, at companies listed on Indonesia Stock Exchange with upward revaluation category. The analysis was done using Path analysis (PLS) without requiring classical assumption and normality test. The results show that leverage affects Asset revaluation, it proves that high leverage because the company to do revaluation of fixed assets, large companies tend to want to display earnings reports that are not too large to reduce their political costs, with asset revaluation, the value of depreciation is calculated Repeated and reduce the company's profit. Operating cash flows affect the revaluation of fixed assets on the grounds that the company requires funds to pay its obligations as well as in revaluation assets cost a great deal for the appraisal services, audit fees and final tax payments. Yet, liquidity has no effect on the revaluation of fixed assets, Within the last 4 years, the study found that users of the Asset revaluation model reporting in Other Comprehensive Income continue to grow and are expected to become financial statements that have superiority and good quality by reporting fair value. In the next research to add the number of variables on Asset revaluation, as well as expand the sample by involving the company revaluation and non revaluation. In addition, to examine the development of asset revaluation, especially in ASEAN countries related to the adoption of IFRS in the case of fixed asset revaluation.Keyword: Leverage, Size, Liquidity, Cash Flow from operation, and Revaluations Assets.

Operating Cash Flow, Earning Response Coefficient, and Fixed Asset Revaluation: Study on Manufacturing Company

The purpose of this study to determine the effect of operating cash flow to the abnormal return and the effect of operating cash flow to the abnormal return of companies that conduct the revaluation is higher than that of non revaluation which adopted SFAS No. 16 (2012). The analysis used in this study are multiple regression, for the period 2012-2015. The results showed that operating cash flow has no effect on non-sampled companies revaluation, while the sample of firms that perform revaluation proves that operating cash flow has a positive and significant impact on the abnormal return. Moreover, the effect of revaluation policy can strengthen the influence between operating cash flow to the firm abnormal return than non revaluation.DOI: 10.15408/etk.v16i1.4820

ANALISIS PERBANDINGAN ATAS MODEL REVALUASI ASET TETAP SESUAI PSAK NO. 16 (REVISI 2007) DAN DAMPAK PERPAJAKANNYA MENURUT UNDANG-UNDANG PAJAK

The purpose of this study was to determine how the impact of revaluation of fixed assets to corporate taxation. This research was conducted in PDAM Tirta Jaya Mandiri Sukabumi. The method of analysis in this research is descriptive qualitative non-statistical (non Descriptive Statistics). The results of the research that revaluation memiliiki impact on the final income tax where the impact of the activities of revaluation of fixed assets is the excess of the revaluation of fixed assets subject to final tax of 10%. Companies can save on taxes by 7% (assuming the petition filed since October 31, 2015 until December 31, 2015 and charged at 3%). Companies can save on taxes by 6% (assuming the petition filed since January 1, 2016 until the date of June 30, 2016 and charged at 4%) or save 4% (assuming the petition filed since July 1, 2016 until December 31, 2016 and charged at 6%). Discount rate provided by the government in 2015 was never used by the company, whereas the discount rate is the opportunity for the company to undertake the revaluation (revaluation) of fixed assets. Companies should consider doing a reassessment (revaluation) on fixed assets in return taking into account the positive impact for the company arising from such activities.Keywords: PSAK No.16, Revaluation of Fixed Assets, Fixed Asset Revaluation Impact.

Mechanisms of corporate governance and fixed asset revaluation

This study investigates the relation between the mechanisms of corporate governance and the fixed-asset revaluation decision in the Tunisian context. We also test the impact of firm size, listing status, previous accumulated losses and leverage (control variables) on the choice of whether to revalue assets. Based on a sample of 91 listed and non-listed firms, logistic regression shows that revaluation decision increases with the proportion of shares held in blocks by institutional investors. In addition, we report clear evidence that firms with previous accumulated losses and highly leveraged firms, which are close to and want to avoid default on their debt covenants, are more likely to revalue assets. These findings suggest that revaluation is used as a tool to improve creditors’ perception of the financial health of the firm and thereby improve the firm’s borrowing capacity.

Incentives for fixed asset revaluations: the UK evidence

PurposeThe purpose of this paper is to examine the incentives for fixed asset revaluation. The motives that are investigated include firm size, fixed asset intensity, firm foreign operations and acquisitions, firm indebtedness and earnings management inclination.Design/methodologyThe study utilises logistic and linear regressions to test the hypothetical relations set up in the study. The categorisation of sample companies into those that perform asset revaluations and those that do not is based on the examination of firms’ annual reports.FindingsThe findings of the study provide evidence that firm size is positively related to fixed asset revaluation. Firms with foreign operations, with low fixed assets, and with high debt capital needs are more likely to perform fixed asset revaluations. This is also the case for firms that carry out acquisitions. The study also shows that fixed asset revaluation is negatively related to earnings management.Research limitations/implicationsFirms that revalue their fixed assets should examine the signals that are likely to be conveyed to investors about their managerial ability and financial prospects. Firms would tend to revalue their fixed assets when it is likely to result in maximum favourable financial consequences. Future research should investigate the possible opportunism in firms’ behaviour, as well as the stock market reaction to fixed asset revaluations.Originality/valueThe paper is useful for investors and financial analysts, as it sheds light on the motives for fixed asset revaluations. The reporting of asset values based on fair values would assist them in making unbiased predictions about firms’ future performance. The paper gives insight about the financial attributes of firms that perform fixed asset revaluations. For example, firms with capital needs would be inclined to undertake a fixed asset revaluation in order to reinforce their financial position.

Reply to discussion of “Motives for fixed asset revaluation: An empirical analysis with Swiss data”

Reply to discussion of “Motives for fixed asset revaluation: An empirical analysis with Swiss data”

A discussion on “Motives for fixed-asset revaluation: An empirical analysis with Swiss data”

A discussion on “Motives for fixed-asset revaluation: An empirical analysis with Swiss data”

Fixed Asset Revaluation and Equity Depletion in the UK

UK GAAP has traditionally allowed the write‐off of purchased goodwill directly to reserves, resulting in the widespread depletion of book equity. Companies have also been permitted to revalue fixed assets at management's discretion. This study examines whether upward revaluations have been associated with the depletion of book equity and with other costly contracting explanations identified in prior research. Our results provide strong support for the equity depletion hypothesis, both with regard to the decision to revalue and the timing of the revaluations. Indebtedness, liquidity, size and fixed asset intensity are also consistently associated with upward revaluation.