When a non-current asset is revalued,the recognition of future tax associated with an asset that has a fair value in excess of cost,acts to reduce the amount of the revaluation reserve.

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When a non-current asset is revalued, the increase in value creates a revaluation reserve. However, if the asset's fair value is higher than its original cost, there will be future tax implications. This means that a portion of the revaluation reserve must be used to account for the future tax liability, thus reducing the amount available for distribution. Therefore, the recognition of future tax associated with an asset that has a fair value in excess of cost acts to reduce the amount of the revaluation reserve.

When a Non-Current Asset Is Revalued,the Recognition of Future Tax