‘Boost your balance sheets now’ warning
1 min read
Manufacturers have a "one-off" opportunity to increase the value of their business assets due to an imminent change in UK accounting rules, according to chartered surveyor Sanderson Weatherall.
On January 1, 2015, current UK accounting practices for many businesses will change to the new Financial Reporting Standard (FRS) 102, the company said. "When this happens, it presents the opportunity for companies to elect to use the principle of 'fair value' to revise the balance sheet value of their property, plant and equipment assets."
Sanderson Weatherall partner, Roy Tubman (pictured), explained: "When companies transition to FRS 102, there is a one-off opportunity for them to revalue their assets at fair value. Essentially, this allows businesses to effectively rebuild their asset registers, particularly where machinery has been written down to zero but is still a valuable part of the company's assets."
After transition to the new standard, FRS 102 only requires valuations to be performed with "sufficient regularity" giving further motivation to businesses to undertake valuations sooner rather than later.
Tubman added: "These changes represent an excellent opportunity for manufacturing businesses to boost the value of their balance sheets through the application of fair values. We have already undertaken fair value valuations for a number of companies in the region and on each occasion it has delivered a significant uplift in asset values."
