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How is accumulated depreciation dealt with as it relates to the revaluation of inventory.

How is accumulated depreciation dealt with as it relates to the revaluation of inventory.

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Answer #1

Inventory revaluation in simple words is re valuing the value of inventory for some adjustments.

When inventories are revalued question arises as to how to deal with the accumulated depreciation of the revaluing assets.For answering this question we need to get the reason why inventories are getting recalued.If inventories are getting revalued because of the reasons of theft,missing goods or goods got destroyed, all these changes should be adjusted from the inventory reserve account and will be only affecting the balance sheet.

If the revaluation is due to decrase in the market value of goods then it should be charged to the income statement as a loss and will also be written off from the balance sheet by that amount.

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