Academic literature on the topic 'Upward asset revaluation'

This study tries to prove empirically the effect of leverage, size, liquidity and operating cash flows on the revaluation of fixed assets. It used a sample of all non-financial companies, which revalued assets in the periode of 2012-2015, at companies listed on Indonesia Stock Exchange with upward revaluation category. The analysis was done using Path analysis (PLS) without requiring classical assumption and normality test. The results show that leverage affects Asset revaluation, it proves that high leverage because the company to do revaluation of fixed assets, large companies tend to want to display earnings reports that are not too large to reduce their political costs, with asset revaluation, the value of depreciation is calculated Repeated and reduce the company's profit. Operating cash flows affect the revaluation of fixed assets on the grounds that the company requires funds to pay its obligations as well as in revaluation assets cost a great deal for the appraisal services, audit fees and final tax payments. Yet, liquidity has no effect on the revaluation of fixed assets, Within the last 4 years, the study found that users of the Asset revaluation model reporting in Other Comprehensive Income continue to grow and are expected to become financial statements that have superiority and good quality by reporting fair value. In the next research to add the number of variables on Asset revaluation, as well as expand the sample by involving the company revaluation and non revaluation. In addition, to examine the development of asset revaluation, especially in ASEAN countries related to the adoption of IFRS in the case of fixed asset revaluation.Keyword: Leverage, Size, Liquidity, Cash Flow from operation, and Revaluations Assets.

Researchers and practitioners have expressed concern that matching has declined over time, as evidenced by a decreasing association between revenues and expenses. They attribute this decline to the shift in financial reporting from a revenue–expense view that emphasizes matching to an asset–liability view that emphasizes the measurement of economic resources that incorporates more fair values. When revenues rise with inflation but the expenses remain tied to historical costs, the two streams tend to diverge. We hypothesize that upwardly revaluing the long-lived fixed operating assets resets the expense stream; thus, changes in revenues will be more closely associated with changes in expenses for firms that revalue than firms that do not upwardly revalue. Based on a sample of United Kingdom firms, we find evidence supporting our expectations, particularly in those higher inflationary industries.

Purpose The purpose of this paper is to investigate whether International Financial Reporting Standards (IFRS)-based data improve bankruptcy prediction over Australian Generally Accepted Accounting Principles (AGAAP)-based data. In doing so, this paper focuses on intangibles because conservative accounting rules for intangibles under IFRS required managers to write off substantial amounts of intangibles previously capitalized and revalued upwards under AGAAP. The focus on intangibles is also motivated by empirical evidence that financially distressed firms are more likely to voluntarily capitalize and make upward revaluations of intangibles compared with healthy firms. Design/methodology/approach This paper analyses a sample of 46 bankrupt firms and 46 non-bankrupt (healthy) firms using a matched-pair design over the period 1991 to 2004. The authors match control firms on fiscal year, size (total assets), Global Industry Classification Standard-based industry membership and principal activities. Using Altman’s (1968) model, this paper compares the bankruptcy prediction results between bankrupt and non-bankrupt firms for up to five years before bankruptcy. In the tests, the authors use financial statements as reported under AGAAP and two IFRS-based data sets. The IFRS-based datasets are created by considering the adjustments on the AGAAP data required to implement the requirements of IAS 38, IFRS 3 and IAS 36. Findings This paper finds that, under IFRS, Altman’s (1968) model consistently predicts bankruptcy for bankrupt firms more accurately than under AGAAP for all of the five years prior to bankruptcy. This greater prediction accuracy emanates from smaller values of the inputs to Altman’s model due to conservative accounting rules for intangibles under IFRS. However, this greater accuracy in bankruptcy prediction comes with larger Type II errors for healthy firms. Overall, the results provide evidence that the switch from AGAAP to IFRS improves the quality of information contained in the financial statements for predicting bankruptcy. Research limitations/implications Small sample size and having data available over the required period may limit generalizability of findings. Originality/value Although bankruptcy prediction is one of the primary uses of accounting information, the burgeoning literature on the benefits of IFRS adoption has so far neglected the role of IFRS data in bankruptcy prediction. Thus, this paper documents a new benefit of IFRS adoption. In this paper, the authors demonstrate how the restrictions on the ability to capitalize and revalue intangibles enhance the quality of information used to predict bankruptcy. These results provide evidence to international standard setters of what they can expect if their efforts to remove non-restrictive accounting practices for intangibles are abandoned.

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Under the U.S. GAAP, fixed assets are reported at their book values which are derived by deducting accumulated depreciation from the original cost.<span style="mso-spacerun: yes;">&nbsp; </span>Companies are allowed to write down their fixed assets if the value of the fixed assets is impaired.<span style="mso-spacerun: yes;">&nbsp; </span>Under no circumstances can a company write up its fixed assets even if the market value of these assets exceeds their book value.<span style="mso-spacerun: yes;">&nbsp; </span>However, such upward revaluation is allowed under the International Accounting Standards (IAS).<span style="mso-spacerun: yes;">&nbsp; </span>Specifically, as an allowed alternative, IAS No.16, &ldquo;Property, Plant &amp; Equipment,&rdquo; permits fixed assets to be revalued periodically and carried at fair value. Significant controversies currently exist regarding the revaluation provision under IAS No.16.<span style="mso-spacerun: yes;">&nbsp; </span>Critics of IAS No.16 have expressed concerns that revaluation of fixed assets is arbitrary and may be used by management to manipulate reported accounting numbers. To address such concerns, this study empirically assesses the reported fixed assets under IAS No.16.<span style="mso-spacerun: yes;">&nbsp; </span>Based on the data of 113 companies whose consolidated financial statements were prepared using IAS, this study documented significant empirical evidence suggesting that fixed assets reported by sample firms under IAS No. 16 reflect their economic value as perceived by investors.<span style="mso-spacerun: yes;">&nbsp; </span>The findings seem to support the use of IAS in preparation of financial statements for cross-border listing of securities.</span></span></p>

Abstract I compare pre-tax and post-tax wealth levels and trends after netting out implicit taxes on tax-deferred assets and accrued capital gains. The analysis covers 1983–2016 for net worth (NW) and augmented wealth (AW), which includes pension and Social Security wealth. Netting out implicit taxes substantially reduces growth in mean and median NW and AW. However, the upward trajectory in NW and AW inequality is basically unchanged from using post-tax values. I also introduce bequest wealth, the value of the estate including death benefits. It is notably more equal than NW and has grown faster over time.

The regulatory framework of many countries allows the upward revaluation of assets. Previous studies on the association of asset revaluation and future performance in Australia (Barth and Clinch, 1998), U.K. (Aboody, Barth and Kasznik, 1999) and Hong Kong (Jaggi and Tsui, 2001) have shown that upward asset revaluations are positively associated with the firm’s operating performance, suggesting that asset revaluations are value relevant. This study extends the previous research by focusing on the New Zealand environment with recent data to examine the association of upward asset revaluation and future operating performance. There is no obvious evidence indicating that upward revaluations are associated with operating performance in New Zealand. Our market assessments show that current year asset revaluations are related to share prices and returns, but are not statistically significant.

The regulatory framework of many countries allows the upward revaluation of assets. Previous studies on the association of asset revaluation and future performance in Australia (Barth and Clinch, 1998), U.K. (Aboody, Barth and Kasznik, 1999) and Hong Kong (Jaggi and Tsui, 2001) have shown that upward asset revaluations are positively associated with the firm’s operating performance, suggesting that asset revaluations are value relevant. This study extends the previous research by focusing on the New Zealand environment with recent data to examine the association of upward asset revaluation and future operating performance. There is no obvious evidence indicating that upward revaluations are associated with operating performance in New Zealand. Our market assessments show that current year asset revaluations are related to share prices and returns, but are not statistically significant.