Why might a company choose not to use revaluation accounting?
Why might a company choose not to use revaluation accounting?
Homework Answers
A company might not choose to use revaluation accounting. It is because when a company uses revaluation accounting it has to restate it's financial statement to revalued values and it has to book profit on revaluation. These profits inflate the financial position of the company as there is no actual inflow of the cash by revaluing the assets.
Further, due to such unrealized extra profit company has to pay corporate income taxes on such income. Overall the company's cashflow position gets affected.
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