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Maharashtra State BoardHSC Commerce (English Medium) 12th Standard Board Exam
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Admission of Partner> Revaluation of Assets and Liabilities

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Topics

  • Introduction
  • Accounting Entries
  • Examples
CBSE: Class 12
Maharashtra State Board: Class 12
CISCE: Class 12

Journal Entries: Revaluation of Assets and Liabilities

1. For a decrease in the value of assets : 

Revaluation A/c or Profit & Loss Adjustment A/c     ...Dr. 

           To Assets A/c

(Decrease in the value of assets) 

2. For an increase in the value of assets :

Assets A/c      ...Dr.

       To Revaluation A/c or Profit & Loss Adjustment A/c

(Increase in the value of assets) 

3. For an increase in the value of liabilities:

Revaluation A/c or Profit & Loss Adjustment A/c     ...Dr.

         To Liabilities A/c

(Increase in the value of liabilities) 

4. For a decrease in the value of liabilities : 

Liabilities A/c     ...Dr.

      To Revaluation A/c or Profit & Loss Adjustment A/c

(Decrease in the value of liabilities)

5. For accounting unrecorded assets

Unrecorded Assets A/c     ...Dr.

       To Revaluation A/c

(accounting of unrecorded assets)

6. For accounting unrecorded liabilities

Revaluation A/c      ...Dr.

      To Unrecorded Liabilities A/c

(Accounting of unrecorded liabilities)

7. For transferring Gain (Profit):

Revaluation A/c     ...Dr.

     To Old Partner's Capital A/cs

(Gain on revaluation credited to Old Partner's Capital A/cs) 

8. For transferring loss: 

Old Partner's Capital A/cs    ...Dr.

      To Revaluation A/c

(Loss on revaluation debited to Old Partner's Capital A/cs)

CBSE: Class 12
Maharashtra State Board: Class 12
CISCE: Class 12

Format: Revaluation Account

                                                     Revaluation Account

Dr.                                                                                                                               Cr.

Particulars ₹ Particulars ₹
To Assets A/c (Individually)
—Decrease in value on revaluation		 ... By Assets A/c (Individually)
—Increase in value on revaluation		 ...
To Liabilities A/c (Individually)
—Increase in amount on reassessment		 ... By Liabilities A/c (Individually)
—Decrease in amount on reassessment		 ...
To Unrecorded Liabilities A/c ... By Unrecorded Assets A/c ...
To Partners' Capital A/c (Remuneration) ... By Partners' Capital (or Current) A/cs ...
To Cash/Bank A/c (Expenses) ...    
To Partners' Capital (or Current) A/cs
(Gain/Profit on Revaluation)		 ...
  ...   ...

Related QuestionsVIEW ALL [64]

Answer the following question in one sentence.
What shows credit balance of revaluation account ?

Navya and Radhey were partners sharing profits and losses in the ratio of 3 : 1. Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill premium in cash. The journal entry recorded for goodwill premium is given below:

Date Particulars LF Debit (₹) Credit (₹)
  Shreya’s Current A/c   ...Dr.   24,000  
     To Navya’s Capital A/c     8,000
     To Radhey’s Capital A/c     16,000
  (Being entry for goodwill treatment passed)      

The new profit-sharing ratio of Navya, Radhey and Shreya will be ______.

Anil and Sunil were partners sharing profits and losses in the ratio of 2:1 respectively. Their Balance Sheet was as follows:

Balance Sheet as on 31st March 2010
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/c   Cash at Bank 4,000
Anil 24,000 Debtors 15,000
Sunil 16,000 Stock 23,500
Trade Creditors 26,000 Furniture 5,000
Anil’s Loan A/c 6,500 Building 25,000
  72,500   72,500

On 1st April 2010, Ram is admitted in the partnership on the following terms:
(1) Ram should bring in cash of Rs. 12,000 as capital for 1/5th share in future profit.
(2) Goodwill A/c is raised in the books of the firm for Rs. 4,500.
(3) A building is revalued at Rs. 28,000 and the value of stock be reduced by Rs. 1,500.
(4) Reserve for doubtful debts is provided at 5% on debtors.

Prepare:
(a) Profit and Loss Adjustment account.
(b) Capital Accounts of partners.
(c) Balance Sheet of the new firm.

Write the word/term or phrase which can substitute the following statement.
The account which shows change in the values of assets.

Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.

Balance Sheet as on 31 March 2018
Liabilities Amt
(₹)		 Amt
(₹)		 Assets Amt
(₹)		 Amt
(₹)
Creditors   1,20,000 Land and Building   75,000
General Reserve   12,000 Furniture   6,000
Capital A/c:     Stock   60,000
Kishor 90,000   Debtors   60,000
Lal 48,000 1,38,000 Bills Receivable   39,000
      Cash at Bank   30,000
    2,70,000     2,70,000

They decided to admit Ram on 1 April 2018 on following terms:

  1. He should be given 1/5th share in profit and for that he brought in ₹ 60,000 as capital through RTGS.
  2. Goodwill should be raised at ₹ 60,000.
  3. Appreciate Land and Building by 20%.
  4. Furniture and Stock are to be depreciated by 10%.
  5. The Capitals of all partners should be adjusted in their new profit sharing ratio through Bank A/c.

Pass necessary Journal Entries in the books of the Partnership firm and a Balance sheet of the new firm.

Following is the Balance Sheet of Mukesh and Anil sharing profit and losses in the ratio of 3:2 as on 31st March, 2019.

Balance Sheet as on 31st March, 2019
Liabilities   Amount (₹) Assets   Amount (₹)
Capital A/c:     Building   72,000
Mukesh 80,000 1,80,000 Plant & Machinery   60,000
Anil 1,00,000 Stock   48,000
Sundry Creditors   60,000 Debtors 42,000 40,000
Bills Payable   10,000 Less: RDD 2,000
      Bank   20,000
      Furniture   10,000
    2,50,000     2,50,000

On 1st April, 2019 Neeta is admitted on the following terms:

  1. She will pay ₹ 1,00,000 of her capital and ₹ 40,000 as her share of Goodwill.
  2. The new profit sharing ratio is to be 5 : 3 : 2.
  3. The assets are to be revalued as under: Building ₹ 1,00,000, Plant & Machinery ₹ 48,000.
  4. RDD to be increased up to ₹ 4,000.
  5. The old partners decided to retain half of the amount of goodwill in the business.
  6. Sundry creditors should be revalued at ₹ 66,000.

Give Revaluation Account, Capitals Accounts and Balance Sheet of New firm.

The account which is prepared to adjust the increase or decrease in the value of assets at the time of admission of a partner is called:

Amalendu and Sameer share profits and losses in the ratio 3:2 respectively Their balance sheet as on 31st March 2017 was as under.

Balance Sheet as on 31st March 2017

Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 10,000 Cash at bank 12,000
Amlendu capital 60,000 Sundry debtors 24,000
Sameer capital 40,000 Land & Building 50,000
General reserve 20,000 Stock 16,000
    Plant and machinery 20,000
    Furniture & fixture 8,000
  1,30,000   1,30,000

On 1st April 2017, they admit Paresh into partnership. The term being that:

  1. He shall pay ₹16,000 as his share of Goodwill 50% amount of Goodwill shall be withdrawn by the old partners.
  2. He shall have to bring in ₹ 20,000 as his Capital for 1/4 share in future profits.
  3. For the purpose of Paresh’s admission, it was agreed that the assets would be revalued as follows.

A) Land and Building is to be valued at ₹ 60,000
B) Plant and Machinery to be valued at ₹ 16,000
C) Stock valued at ₹ 20,000 and Furniture and Fixtures at ₹ 4,000.
D) A Provision of 5% on Debtors would be made for Doubtful Debts.

Pass the necessary Journal Entries in the Books of a New Firm.

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