Appraisal Capital

Posted in Finance, Accounting and Economics Terms, Total Reads: 270
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Definition: Appraisal Capital

Appraisal capital is an adjustment in accounting. It happens because the value of company’s assets is higher than their book value. 


In such case, we should debit the increased value and credit it into appraisal capital which is also equity account belonging to shareholders.


It is not a very popular phenomenon in USA but is present in quite a few countries worldwide. 


Example

If a land has a book value of 1 Crore and when the actual valuation is done, it is found to be 1.25 Crore. So the additional 25 lakhs are accounted in the equity account which belongs to the shareholders of the company.


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