It is clear that the Securities and Exchange Commission will not be requiring U.S. companies to use IFRS in the near future, but it is inevitable that IFRS will eventually become a more significant part of the U.S. financial reporting environment. This is actually occurring to an extent as more and more global companies based outside the U.S. are being allowed to file US Securities and Exchange financial reports. For overseas companies who do not file in the U.S. with the SEC, IFRS is becoming the world standard for financial reporting. With Release 11i and subsequently with Release 12, Oracle E-Business Suite has functionality to allow users to live in both the IFRS and U.S. GAAP worlds.

Under U.S. GAAP, fixed assets are recorded at historic cost and are then depreciated to a disposal or residual value. If there are certain indicators that the realizable value of the fixed asset has negatively changed, then the asset is written down and a loss is recorded. This is referred to as impairment.
Under IFRS, financial statement issuers have the option to choose either the cost model (which is in most respects similar to the U.S.GAAP model) or the revaluation model (for which there is no parallel reporting under U.S.GAAP). Under the revaluation model, fixed assets may be periodically written up to reflect fair market value – something that is specifically prohibited under U.S.GAAP and SEC authority.

Cost Model
In the cost model, the fixed assets are carried at their historical cost less accumulated depreciation and accumulated impairment losses. There is no revaluation or upward adjustment to value due to changing circumstances. This is similar to the model currently in use by U.S. GAAP.
Revaluation Model
In the revaluation model, an asset is initially recorded at cost, but subsequently its carrying amount may be increased to account for appreciation in value. The difference between the cost model and revaluation model is that the revaluation model allows both downward and upward adjustment in value of an asset, while the cost model allows only downward adjustment due to impairment loss. This is the model currently adopted by IFRS.
EBS Considerations for the Revaluation Model
In EBS, you can revalue all categories in a fixed asset book, all assets in a category, or just individual assets. Revaluing all categories in a book or all assets in a category is considered “Mass Revaluation” Revaluing individual assets is effected on an asset-by-asset basis.
Regardless of the method used, a prerequisite to performing an asset revaluation is setting up your revaluation rules and accounts, which is done when you define your depreciation books. If you choose to allow revaluations, you must specify your revaluation rules – specifically, whether you will allow EBS to revalue accumulated depreciation. If you do not revalue accumulated depreciation, Oracle Assets transfers the accumulated depreciation to the revaluation reserve account.

Revaluation Functionality is not for Fixed Asset Revaluation under Purchase Accounting Rules
One area of confusion that we have encountered several times is whether the asset revaluation functionality of Oracle EBS can be used to revalue assets of an acquired company.
Under Financial Accounting Standard for Business Combinations, companies are required to revalue their assets to fair value at date of acquisition. This is mandatory for all companies that have to file annual reports with the SEC or roll-up into an SEC reporting company. For our purposes, this means just about everyone. The same applies to IFRS reporting companies. It used to be that companies could use pooling of interest where they could just leave the fixed assets from the acquired company’s books as-is for cost, accumulated depreciation, and date in-service. This is no longer allowable.
Since under both U.S. GAAP and IFRS there is no such thing as a "merger," there will always be a company identified as the acquired. For this company, all fixed assets need to
(1) Be restated to fair value at date of acquisition;
(2) Have the date in service restated to date of acquisition; and
(3) Have any accumulated depreciation zeroed out. If a company can support a contention that netting accumulated depreciation with cost is materially the same as fair value, the acquired company may do that, but the net value has to be migrated to the original cost field, the accumulated depreciation zeroed, and the date in-service still reset to date of acquisition. If the company is restating to fair value and cannot use the netting method, then a number of new fair values must be done for each of the fixed assets.
Mass Revaluation functionality will not work and is not recommended for these types of revaluations for the following reasons:
1. The date placed in-service must be changed to date of the business combination.
2. Mass and category revaluation will not accommodate netting accumulated depreciation or loading multiple, non-percentage driven fair value restatements.
3. Individual asset revaluation is impractical for large numbers of assets and also does not accommodate netting accumulated depreciation or resetting the date placed in service.