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Furniture ( ₹ 2,50,000 × 40%) ₹ 1,00,000 Machinery (₹ 1,50,00 × 60% ) ₹ 90,000 Net decrease in value of assets ₹ 1,90,000
Reserves, Accumulated Profits, and Losses are not transferred to the incoming Partner’s Capital Account because such reserves, Profit and Losses relate to the pre-admission period and hence belong to old partners and not to the incoming partner.
The amount credited in the General Reserve is an amount set aside out of profits when the new partner was not a partner. Thus, it belongs to the old partners and therefore, is distributed among old partners in their old…
Accumulated profits means profits which have accumulated over the years either because they have not been distributed among partners. The example is Profit and Loss Account (Credit balance) The losses which have not yet been written off or losses which…
Assets are revalued and liabilities of a firm are reassessed at the time of admission of a partner because the new partner should neither benefit nor suffer because of the changes in the value of assets and liabilities as on…
Revaluation Account is prepared: (i) To determine the Gain (profit)/Loss arising on account of Revaluation of Assets and Reassessment of Liabilities. (ii) To record the effect of Revaluation of Assets and Reassessment of Liabilities so as to show Assets and…
When Revaluation Account is prepared, the Assets and Liabilities are shown at their revised (revalued) values in the Balance Sheet of new firm.
Revaluation Account is a Nominal Account. It is credited with an increase in the value of assets and a decrease in the amount of liabilities (it is a gain) and debited with any decrease in the value of assets and…
‘Revaluation’ means ‘Revaluation of Assets and Reassessment of Liabilities’ at the time of reconstitution of the Partnership.
There is a need to revalue assets and reassess liabilities in the following circumstances: (i) When there is change in the profit sharing ratio (ii) On admission of a new partner (iii) On retirement or death of a partner