Question

1. Why would a company not be willing to elect the revaluation method?

Please provide 2 ratios that will be negatively affected by the use of the revaluation method

Answer 1

revaluation is a method to describe true value of assets owned by the company.it is d9one ti find the fair value of assets in the books of accounts.

some of the problems where the company doesn't adopt the revaluation method of depreciation because some of the exercises of revaluation might become costly and may require expert assistance and the benefit may be less than the cost.

in some cases the asset might not be revalued every year, and the asset value may not decline. and no appreciation might be charged in the books of accounts.which will result in wrong numbers in the financial statement. also, the asset might be overvalued/undervalued if depreciation is not charged properly and it will also affect profit and loss ststement.this can be some of the reason where the company doesn't adopt this revaluation method 0f depreciation.

there are many aftereffects of revaluation in the books of accounts=.it increases the book value of the asset which increases total assets value .this will result in a change in ROE(return on equity), ROA(return on asset), ROCE(return on capital employed).

there are commonly two types of revaluation which are upward revaluation and downward revaluation. any change in the value of assets will result in a change in ratios.so, any decrease in the value might have an impact on these ratios and it will negatively impact the company overall results.