Difference Wiki

Revaluation Account vs. Realisation Account: What's the Difference?

Edited by Huma Saeed || By Sumera Saeed || Published on December 23, 2023
A revaluation account assesses and records changes in asset values; a realisation account tracks asset liquidation and associated gains/losses during dissolution.

Key Differences

The revaluation account is used for recording increases or decreases in the value of assets. The realisation account is created during the dissolution of a business to reflect the process of converting assets into cash.
Sumera Saeed
Dec 23, 2023
Revaluation can occur at any time to reflect current asset values. Realisation occurs specifically when a business is being wound up or dissolved.
Sumera Saeed
Dec 23, 2023
Revaluation affects the balance sheet by altering asset values. Realisation affects the profit and loss statement by showing gains or losses from asset liquidation.
Huma Saeed
Dec 23, 2023
Revaluation involves adjusting book values of assets. Realisation involves actual transactions of selling assets.
Harlon Moss
Dec 23, 2023
The outcome of revaluation is adjusted asset values on the balance sheet. Realisation results in the actual liquidation value of assets during closure.
Aimie Carlson
Dec 23, 2023
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Comparison Chart

Purpose

Record value changes of assets
Track asset liquidation in dissolution
Sumera Saeed
Dec 23, 2023

Timing

Can occur any time
Occurs during dissolution
Sumera Saeed
Dec 23, 2023

Financial Impact

Affects balance sheet
Affects profit and loss statement
Sumera Saeed
Dec 23, 2023

Transactions

Involves asset value adjustments
Involves selling of assets
Harlon Moss
Dec 23, 2023

Outcome

Adjusted asset values
Liquidation value of assets
Harlon Moss
Dec 23, 2023
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Revaluation Account and Realisation Account Definitions

Revaluation Account

Used to align asset values with current market conditions.
The revaluation account was adjusted to reflect the current market price of investments.
Sumera Saeed
Dec 06, 2023

Realisation Account

An account used during the winding up of a business to record the conversion of assets into cash.
The realisation account showed proceeds from the sale of company assets.
Sumera Saeed
Dec 06, 2023

Revaluation Account

Can lead to an increase or decrease in the company's net worth.
The land revaluation resulted in an increased net worth in the revaluation account.
Sumera Saeed
Dec 06, 2023

Realisation Account

Used to settle accounts payable and other obligations in the dissolution process.
The realisation account was utilized to pay off creditors as the business closed.
Sumera Saeed
Dec 06, 2023

Revaluation Account

Aids in providing a true and fair view of the company's financial position.
The revaluation account helped in presenting a realistic financial picture in the annual report.
Aimie Carlson
Dec 06, 2023

Realisation Account

Final step in accounting before a business ceases to exist.
The realisation account was the last to be closed before the company was officially dissolved.
Aimie Carlson
Dec 06, 2023

Revaluation Account

Reflects adjustments to asset book values on the balance sheet.
Following the revaluation, the machinery's value in the revaluation account was higher.
Sumera Saeed
Dec 06, 2023

Realisation Account

Ensures all transactions related to asset disposal are recorded systematically.
Every sale during the liquidation was recorded in the realisation account.
Aimie Carlson
Dec 06, 2023

Revaluation Account

An account used to record increases or decreases in the value of existing assets.
The company's revaluation account showed an increase in property value due to market conditions.
Sumera Saeed
Dec 06, 2023

Realisation Account

Reflects the gains or losses from liquidating assets.
The realisation account indicated a loss on the sale of outdated equipment.
Huma Saeed
Dec 06, 2023

FAQs

What is a realisation account?

It's an account used to record the process of converting assets into cash during business dissolution.
Huma Saeed
Dec 23, 2023

When is a revaluation account used?

Whenever there is a need to adjust asset values to reflect current market conditions.
Sumera Saeed
Dec 23, 2023

How does revaluation affect the balance sheet?

It changes the asset values, impacting the company's net worth.
Sumera Saeed
Dec 23, 2023

When is a realisation account used?

During the winding up or dissolution of a business.
Harlon Moss
Dec 23, 2023

Does realisation always result in profit?

No, it can show a profit or loss depending on the sale proceeds versus book values.
Harlon Moss
Dec 23, 2023

Is revaluation a mandatory process?

Not always; it depends on the company's policy and accounting standards.
Sumera Saeed
Dec 23, 2023

What is a revaluation account?

It's an account for recording changes in the value of a company's assets.
Sumera Saeed
Dec 23, 2023

What does the realisation account show?

It shows gains or losses from selling assets and settling liabilities.
Sumera Saeed
Dec 23, 2023

Does revaluation affect company operations?

Not directly, as it's more about financial reporting.
Sumera Saeed
Dec 23, 2023

Can revaluation impact tax liabilities?

Yes, increased asset values can affect depreciation and tax calculations.
Janet White
Dec 23, 2023

Who handles the realisation account?

Typically, a liquidator or someone responsible for overseeing the dissolution process.
Sumera Saeed
Dec 23, 2023

What happens to the realisation account after dissolution?

It's closed once all assets are liquidated and liabilities settled.
Sumera Saeed
Dec 23, 2023

Can revaluation lead to increased profits?

Indirectly, by increasing asset values, it can enhance net worth but doesn't impact profit directly.
Sumera Saeed
Dec 23, 2023

What happens after realisation is complete?

The business pays off liabilities and distributes any remaining funds to owners or shareholders.
Aimie Carlson
Dec 23, 2023

Is the realisation account part of regular accounting?

No, it's specific to the dissolution process of a business.
Aimie Carlson
Dec 23, 2023

Who decides on asset revaluation?

Company management, often based on appraisals by external experts.
Janet White
Dec 23, 2023

Can a realisation account exist in a solvent company?

No, it's specifically for companies in the process of winding up.
Sumera Saeed
Dec 23, 2023

Are revaluation reserves distributable?

Generally, they are not distributed as cash but reflect in the company's equity.
Sumera Saeed
Dec 23, 2023

What's the main difference between these accounts?

Revaluation account adjusts asset values, while realisation account deals with asset liquidation during dissolution.
Aimie Carlson
Dec 23, 2023

What types of assets are revalued?

Fixed assets like property, plant, and equipment are commonly revalued.
Aimie Carlson
Dec 23, 2023
About Author
Written by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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