CIRD30580 - Intangible assets: notes on accounting practice: revaluations and their recognition

Only where an intangible asset has a ‘readily ascertainable market value’, may it be revalued in a company’s accounts to its market value. If one such intangible asset is revalued, all other capitalised intangible assets of the same class should be revalued.

A company can choose whether or not to make an initial revaluation of these assets but once an intangible asset has been revalued, further revaluations should be performed sufficiently often to ensure that the carrying value does not differ materially from the market value at the balance sheet date.

The revaluation should be reflected in the current period’s results. Amortisation charged before the revaluation should not be written back to the profit and loss account.

An asset has a ‘readily ascertainable market value’ only if:

• the asset belongs to a homogenous population of assets that are equivalent in all material respects, and
• an active market, evidenced by frequent transactions, exists for that population of assets.

An example of such an asset might be milk quota held by a farming company.

Except as described above, or in the paragraphs in CIRD30560 covering the reversal of impairment losses, goodwill and intangible assets should not be revalued upwards.