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Simple English definitions for legal terms
revaluation surplus
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A quick definition of revaluation surplus:
Revaluation surplus is the extra money a company makes when it revalues its assets at a higher value. For example, if a company owns a building that was worth $1 million but is now worth $1.5 million, the company has a revaluation surplus of $500,000. This surplus is not from the company's profits, but from the increase in the value of its assets. It is like finding extra money in your piggy bank because the coins you saved are now worth more than before.
A more thorough explanation:
Definition: Revaluation surplus is the surplus gained when assets are reappraised at a higher value.
For example, if a company owns a building that was purchased for $500,000 but is now worth $700,000, the revaluation surplus would be $200,000.
This surplus is recorded on the balance sheet as a separate line item and is not considered earned income. It is a result of an increase in the value of the company's assets.
Revaluation surplus is also known as appreciation surplus.