Revaluation of Assets and Reassessment of Liabilities

Revaluation of Assets and Reassessment of Liabilities

How to Pass Journal entries?

1. Increase in the value of Assets

Assets A/c.............Dr (Revised Value-Book Value)/(actual increase)

To Revaluation A/c

Land and building appreciated by 50,000

Land and building A/c..........Dr 50,000

To Revaluation A/c 50,000

Decrease in the value of Assets

Revaluation A/c..........Dr

To Assets A/c

Machinery written off by 5,000

Revaluation A/c ........Dr 5,000

To Machinery A/c 5,000 

Increase in the value of Liabilities

Revaluation A/c..........Dr

To Liabilities A/c

Creditors were increased by 8,000

Revaluation A/c.......Dr 8,000

To Creditors A/c 8,000

Decrease in the Value of Liabilities

Liabilities A/c ...............Dr

To Revaluation A/c

Bills payable is reduced by 9,000

Bills payable A/c.......Dr 9,000

To Revaluation A/c 9,000

Unrecorded Assets (now record)

Assets A/c.........Dr

To Revaluation A/c

Purchased vehicle of Rs 50,000 not recorded in books

Vehicle A/c ......Dr 50,000

To Revaluation A/c 50,000

Unrecorded Liabilities (now record)

Revaluation A/c........Dr

To Liabilities A/c

Outstanding salary 10,000 not recorded

Revaluation A/c ...Dr 10,000

To O/S Salary A/c 10,000

Profit in Revaluation A/c

(Total of credit is more then Debit)

Revaluation A/c ............Dr

To All Partners Capital A/c (old ratio)

Loss in Revaluation A/c

(total of debit is more then total of credit)

All Partners Capital A/c ......Dr (old ratio)

To Revaluation A/c

Multiple Choice

When Decrease in the value of Asset

• Revaluation A/c is Debited

• Revaluation A/c is Credited

Multiple Choice

Increase in the value of Liabilities

• Revaluation A/c is Debited

• Revaluation A/c is Credited

Multiple Choice

Unrecorded Assets are now recorded, entry will be

• Revaluation A/c ...Dr

  To Assets A/c

• Assets A/c...Dr

  To Revaluation A/c

Multiple Choice

When unrecorded liabilities are recorded, which A/c is debited?

• Liabilities A/c

• Revaluation A/c

Multiple Choice

Profit/Loss on Revaluation A/c is distributed among

• Remaining Partners in Gaining Ratio

• All Partners in old ratio