Why don’t we revalue current assets like non-current assets?

Concept of revaluation of assets is usually associated with non-current assets only. The main reason why the term ‘revaluation’ is just attached with non-current asset might be that International Accounting Standard (IAS) 16 use this term. Therefore, usually revaluation of assets refers to revaluation of non-current assets. But this does not mean that other assets like current assets are not revalued subsequent to their recognition.

Perfect example is of Inventories where the policy dictated by IAS 2 is that inventories should be valued at lower of cost and net realizable value. And in that case if inventory was initially recorded at cost and later it was discovered that NRV is lower then cost than inventory will be revalued to be stated at NRV. But we don’t use the word revaluation for this more often and call it adjustment.

Another example can be of foreign currency receivable and payable where the amounts of such current assets or liabilities is translated from a foreign currency to local currency for the purpose of reporting. In such cases, the value of assets can increase or decrease and therefore they might need revaluation at the end of each period depending on the nature of transaction and the context. But we don’t call such gain or loss as revaluation gain/loss rather it is termed as exchange gain or exchange loss.

Yet another example can be of financial instruments

In short, revaluation is not related to fixed assets alone, current assets are also revalued but certainly the nature of revaluation of non-current assets and the reasons are different from the revaluation of current assets most of the time. Also, gain because of revaluation is not just recorded for non-current assets, there are numerous cases where gain is recorded with respect to current assets but not termed as ‘revaluation gain’ as we have developed other terminologies for them.