1. Revaluation of partnership assets
Chapter 43

2. Why revalue?
The profit / losses sharing ratios that exist in a partnership need to be amended when:
A new partner is admitted
A partner leaves the partnership
The partners want to change the profit / losses sharing ratios
Revalue the assets
Record the changes in the ledger accounts

3. What to do… if: new value of assets 90,000 is more than:
old value of assets
-60,000
the result is:
gain on revaluation
30,000
40,000
is less than:
-50,000
loss on revaluation
-10,000

4. Open a revaluation account
For each asset showing a gain:
a. Debit the asset account with the gain
b. Credit the revaluation account
2. For each asset showing a loss:
a. Debit revaluation account
b. Credit the asset account with loss
3. If there is an increase in total valuation of assets:
Debit profit to revaluation account
Credit old partner’s capital account in the old profit & loss sharing ratios
4. If there is a fall in the total valuation of assets:
Debit old partner’s capital accounts in old profit & loss sharing ratios
Credit loss to revaluation account

5. Questions
43.1 page 574