Professional Documents
Culture Documents
Statutory Compliance
Guidance note has been issued on Treatment of Reserve created on Revaluation of Fixed Assets by
ICAI and as per Para 12, it “will be prudent not to charge additional depreciation against revaluation
reserve” i.e. Depreciation on revaluation portion as posted on asset should be debited to revaluation
reserve rather to depreciation account.
E.G –
On Posting of Revaluation
On Posting of Depreciation
Issue addressed in this workaround – To charge depreciation on revaluation figures from Revaluation
Reserve rather than depreciation account i.e. Rs100 from depreciation & Rs20 from reserves.
Considering entry of Rs120 posted by sap, another entry of Rs20 is derived from new depreciation area
with an objective to reverse the depreciation of Rs20 from depreciation account & to charge the same
from revaluation reserve account.
On Posting of Depreciation
Summation of above two entries will give us the required accounting entry for depreciation i.e. below
entry
With posting indicator 3 & derived value from Real Depreciation area & 70 Depreciation Area
3. Delimit of transaction type 800 from depreciation area 70 – To ensure revaluation should not
get posted in depreciation area 70
4. GL Assignment in AO90
The above solution is explained with the help of below example
ABAW – Revaluation Posted – This transaction will not get posted in depreciation area 70 & thus we get
differential amount in depreciation area 75.
Accounting entry for depreciation area 01