Omvärderingsreserver

Omvärderingsreserver, often translated as "revaluation reserves," are a specific accounting concept primarily relevant in certain accounting frameworks like International Financial Reporting Standards (IFRS) and some national Generally Accepted Accounting Principles (GAAP). These reserves arise when a company revalues an asset upwards to its fair market value rather than continuing to record it at its historical cost less depreciation. This upward adjustment is not recognized as profit in the income statement but is instead credited directly to an equity account called the revaluation reserve.

The most common assets subject to revaluation are property, plant, and equipment, and intangible assets. Revaluation is typically permitted or required only when fair value can be reliably measured. When an asset is revalued upwards, the difference between the new carrying amount and the old carrying amount is recorded in the revaluation reserve. If the asset is later sold, any amount accumulated in the revaluation reserve related to that asset is transferred to retained earnings. If an asset is subsequently revalued downwards, this reduction is first offset against any existing revaluation reserve for that specific asset. Any further downward revaluation would then be recognized as an expense in the income statement. The existence of revaluation reserves can impact a company's equity position, influencing financial ratios.