Revaluing

Revaluing is the process of reassessing and adjusting a value to reflect current information or market conditions. The term is used in economics, accounting, and taxation to denote formal changes in an asset, currency, or liability's stated value.

Currency revaluation is an official upward adjustment of a country's currency by its central bank or government, typically within fixed or managed exchange-rate regimes. It changes relative prices, influencing imports, exports, inflation, and external debt. It is distinct from market movements in floating-rate systems and can have wide economic effects.

In accounting, revaluation updates the book value of assets or liabilities to reflect current fair value. An upward revaluation increases asset values on the balance sheet and, under many standards, creates a revaluation surplus in equity. A downward revaluation reduces equity or is charged to profit and loss, depending on prior surpluses and rules. After revaluation, depreciation and impairment considerations are adjusted, and disclosures must meet applicable standards such as IFRS or GAAP.

Valuation typically employs market, income, or cost approaches. The timing and basis of revaluations are set by standards, regulation, and policy. Revaluations aim to provide more accurate financial reporting but can add complexity and volatility.

Common contexts include real estate portfolios under IFRS revaluation models, periodic asset reviews for impairment, and currency policy actions by central banks. Critics warn of volatility; supporters argue for more accurate, comparable financial and economic signals.