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It is just possible that value of certain assets such as land and building may increase. This increase in the value is gain, so it will be credited. It will also increase the value of assets, so assets account will be debited as the rule for assets goes ‘debit the increase’. 

Treatment in Final Accounts 

(i) If appreciation appears in Trial balance. It will be shown at the credit side of profit and loss account only, because it is gain. 

(ii) If appreciation appears in adjustment. All the items appearing in adjustments are shown at two places in the final accounts. Appreciation is a gain so it will be shown at the credit side of profit and loss account on the one hand, and on the other hand, it will be added to the value of concerned assets in the Balance sheet. If land and building worth $ 1,00,000 appreciated @ 15% the following entry will be passed.

It will be shown in the Profit and loss account and Balance sheet as under :

Profit and Loss Account Balance Sheet

Note. As a convention of conservatism firms generally do not show the increase in the value of their assets. I as such appreciation is casual item. Whereas depreciation is a usual item.