Admission of Partner> Reserves and Accumulated Profit/Losses - Investment Fluctuation Reserve

A. When Book Value and Market Value of Investments is same:

Investment Fluctuation Reserve A/c     ....Dr.

     To Partner's Capital A/cs

B. When the Market Value of Investments is less than the Book Value:

1. Fall in the value is less than Investment Fluctuation Reserve:

Investment Fluctuation Reserve A/c     ...Dr.

      To Investments A/c                            (Book value - Market value)  

      To Partner's Capital A/cs                    (In old ratio) 

2. Fall in the value is Equal to Investment Fluctuation Reserve:

Investment Fluctuation Reserve A/c      ...Dr.

       To Investments A/c

3. Fall in the value is More than the Investment Fluctuation Reserve:

Investment Fluctuation Reserve A/c       ...Dr.

Revaluation A/c                                      ...Dr.

     To Investments A/c

C. When Market Value of Investments is More than the Book Value:

1. The entire amount of the Investment Fluctuation Reserve is credited to old Partner's Capital A/cs:

Investment Fluctuation Reserve A/c     ...Dr.

      To Partner's Capital A/cs                   (In old ratio)

2. Increase in the value of Investments is debited to Investments Ale and
credited to Revaluation A/c:

Investments A/c     ....Dr.

      To Revaluation A/c 

(To bring up the value of Investments to Market value.) 

3. Revaluation A/c        ....Dr.

       To Partner's Capital A/cs                       (In old ratio)