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Question
A and B are partners of a partnership firm sharing profits in the ratio of 3 : 2 respectively. C was admitted for a `1/5`th share of profit. Machinery is overvalued by 10% (book value of ₹ 1,32,000), and building is undervalued by 10% (book value of ₹ 5,40,000). Unrecorded debtors of ₹ 10,000 would be brought into the books. What will be the gain/loss on revaluation?
Options
Gain ₹ 50,800
Loss ₹ 58,000
Gain ₹ 58,000
Loss ₹ 50,800
MCQ
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Solution
Gain ₹ 58,000
Explanation:
| Dr. | REVALUATION ACCOUNT | Cr. | |
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Machinery | 12,000 | By Building | 60,000 |
| To Gain on Revaluation transferred to Capital A/cs | 58,000 | By Debtors | 10,000 |
| 70,000 | 70,000 | ||
Actual Value of Machinery = `1,32,000 xx 100/110`
= 1,20,000
Difference in actual value and book value = 1,32,000 − 1,20,000
= 12,000
Actual Value of Building = `5,40,000 xx 100/90`
= 6,00,000
Difference in actual value and book value = 6,00,000 − 5,40,000
= 60,000
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Chapter 3: Admission of a Partner - OBJECTIVE TYPE QUESTIONS [Page 3.236]
