A Review of Property, Plant and Equipment Asset Revaluation Decision Making in Indonesia

Development of a Conceptual Model

  • Adam Zakaria Birmingham City University, City North Campus
  • David John Edwards Birmingham City University, City North Campus
  • Gary David Holt Birmingham City University, City North Campus
  • Vijay Ramachandran Birmingham City University, City North Campus
Keywords: Accounting, Asset Revaluation Decision, cost or revaluation model


Various motives underpinning the revaluation of fixed assets and the effects of using either a cost or revaluation model are investigated. This study serves as the basis for the design of a revaluation guidance framework aimed at those who produce and use financial statements. The framework underpins the asset revaluation decision task and its potential consequences for stakeholders. A diverse range of extant literature (relating to revaluation of publicly listed companies’ fixed assets in the Indonesian Stock Exchange) is synthesized to develop the conceptual model. The model embraces seven motive factors (Mn) and two revaluation effects factors (En) to highlight the advantages and disadvantages of financial aspects that should be considered before deciding to revalue. The effect factors can impact business outcomes and so are designed to feedback into the revaluation decision. The study focuses on Indonesia, which has unique characteristics relating to its accounting atmosphere and economic conditions. This may limit generalizability of the findings, but since the Indonesian Financial Accounting Statement (IFASS) 16 was adopted from International Accounting Standard (IAS) Statement No. 16, the model may hold broader international relevance. This research may assist financial practitioners when making asset revaluation decisions, while the innovative conceptual model developed will be of use to academic peers researching within related subject domains.