With the exception of antiques or vintage status the value of fixtures and fittings or motor vehicles will fall over time, but the same is not true of property. The value of the latter has risen inextricably over recent decades with short-term slumps being recouped and surpassed. As a reviewer we must understand if the continued depreciation of such assets is appropriate, and decide if gains in value can be reflected in the financial statements.

Cast your mind back to the description of depreciation we previously identified. Remember that it is a method of allocating cost to the periods which can benefit from the use of the assets it is not about adjusting the carrying value of the asset to its current market value.

However should the continued depreciation of a fixed asset mean that increases in its market value should be ignored? The answer to this question partially depends on the accounting regime being used.

When upward revaluation is allowed and management decide to adopt this approach it must be done consistently, and cherry picking is not permitted. This means that the decision to revalue is taken by class of asset (e.g.