higher property and capital gains taxes. Further, the provision against upward restatement ensures conservative valuation. The United Kingdom, Australia, and India allow upward revaluation in the values of fixed assets to bring them in consonance with fair market values. However, the law requires disclosure of the basis of revaluation, amount of revaluation made to each class of assets (for a specified period after the financial year in which revaluation is made), and other information. Similarly, the law prohibits payment of dividend out of any reserve created as a result of the upward revaluation of fixed assets. The law in Australia has been amended recently to allow for the payment of dividends from the increase in the value of non-current assets in certain instances where a company meets other liquidity tests (see section 254T of the Corporations Act 2001 (Cth)). Important points Increase in the value of fixed assets because of revaluation of fixed assets is credited to "Revaluation Reserve", and is not available for distribution as dividend. Revaluation Reserve is treated as a Capital Reserve. The increase in depreciation arising out of revaluation of fixed assets is debited to revaluation reserve and the normal depreciation to Profit and Loss account. Selection of the most suitable method of revaluation is extremely important. The most used method is the appraisal method. Methods such as indexation and reference to current market prices are also used. However, when these methods are used they are crosschecked with the values arrived at by using the appraisal method. When an asset is sold that has previously been revalued, the revaluation within the carrying value is debited to the Revaluation Reserve. When assets are revalued, every balance sheet shall show for a specified period of years, the amount of increase or decrease made in respect of each class of assets. Similarly, the increased/decreased value shall be shown in place of the original cost. In case of land and buildings, revaluation is desirable as their value generally increases over time, and is carried out every 3 to 5 years. In case of plant and machinery, revaluation is carried out only if there is a strong case for it. In case of depreciable assets such as vehicles, furniture and fittings or office equipment, revaluation is not carried out. Revaluation should not result in the net book value of an asset exceeding its recoverable value. Downward revaluation Revaluation does not mean