Value adjustment account is an account that is created to adjust the asset account for indirect depreciation. It is necessary because with this type of depreciation, in contrast to direct depreciation, the asset is contained in the asset account with its full acquisition value. The impairments (depreciation) are posted to the value adjustment account. While the investment account appears on the balance sheet on the assets side, the value adjustment account is entered on the liabilities side of the balance sheet and thus forms an adjustment item on the assets side.
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