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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]

Ravi and Gaurav are partners in a firm. They want to admit Dhruv for `1/4`th share in profit. For this, they revalued their machinery from ₹ 30,000 to ₹ 40,000 and creditors from ₹ 1,10,000 to ₹ 1,00,000. What journal entry will be passed:

Ram and Shyam were in partnership sharing profits and Losses in the proportion of 3 : 1 respectively. Their Balance sheet as on 31st March, 2020 stood as follows:

Balance Sheet as on 31st March, 2020
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors   80,000 Cash 80,000
Bills Payable   42,000 Sundry Debtors 64,000
Capital Accounts:     Land and Building 32,000
Ram 1,20,000 1,60,000 Stock 40,000
Shyam 40,000 Plant and Machinery 60,000
General Reserve   16,000 Furniture 22,000
    2,98,000   2,98,000

They admit Bharat into partnership on 1st April 2020. The term is that

  1. He shall have to bring in cash ₹ 40,000 as his Capital for 1/5th share in future profit and ₹ 20,000 as his share of Goodwill.
  2. A provision for 5% doubtful debts to be created on sundry debtors.
  3. Stock should be appreciated by 5% and Land and Building be appreciated by 20%.
  4. Furniture to be depreciated by 20%.
  5. Capital Accounts of all partners be adjusted in their new profit-sharing ratio through Cash Account.

Prepare:

  1. Profit and Loss Adjustment Account
  2. Partners' Capital Account
  3. Balance Sheet of the new firm.

Write a word/phrase/term which can substitute the following statement.

An account that is debited when the partner takes over the asset.

The gradual and permanent decrease in the value of fixed assets due to any cause.

The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2

Balance Sheet As On 31st March 2018
Liabilities Amount (₹) Assets Amount (₹)
Creditors 30,000 Cash 3,000
Capital A/c   Building 15,000
Om 21,000 Machinery 21,000
Jay 21,000 Furniture 900
Current A/c   Stock 12,300
Om 3,750 Debtors 27,000
Jay 3,450    
  79,200   79,200

They take Jagdish into partnership on 1st April 2018 the terms being:

  1. Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
  2. He should bring 9,000 as capital for 1/4th share in future profits.
  3. Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%.
  4. A Provision of 5% on debtors to be made for doubtful debts.
  5. Stock is to be taken at a value of 15,000.

Prepare profit and loss A/c, Partner’s Current A/c, Balance Sheet of the new firm.

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

The following is the Balance sheet of partners Aditya and Chaitanya on 31st March, 2019 they share profits and losses in the ratio of 3 : 2:

Balance sheet as on 31st march 2019

Liabilities

Amount ₹

 Assets  Amount ₹
Creditors 60,000 Building 30,000
Capital Accounts:   Furniture 1,800
Aditya 42,000 Machinery 42,000
Chaitanya 42,000 Stock 24,600
Current Accounts:   Debtors 54,000
Aditya 7,500 Cash 6,000
Chaitanya 6,900    
  1,58,400   1,58,400

Adjustments:

They admitted Sachin into partnership on 1st April, 2019 on the following terms:

  1. Building to be valued at ₹ 36,000, machinery and furniture to be reduced by 10%.
  2. Sachin should pay ₹ 6,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
  3. A provision of 5% on debtors to be made for doubtful debts.
  4. He should bring ₹ 18,000 as capital for 1/4th share in future profit.
  5. Stock is to be taken at the value of ₹ 30,000.

Prepare:

  1. Profit and Loss Adjustment Account.
  2. Partners’ Current Account.
  3. 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.

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