1. REVALUATION OF ASSETS AND REASSESSMENT OF LIABILITIES

2. Need For Revaluation
At the time of admission of a new partner, it is always desirable to ascertain whether the assets and liabilities of the firm are shown in the books at the current value or not.
To show the correct values of the assets and liabilities.
To see for any unrecorded assets and liabilities of the firm.

3. Result of Revaluation
There can be gain or loss at the time of revaluation.
The loss or gain is transferred to Capital accounts of Old Partner’s in the OLD RATIO.

4. Accounting Treatment 1. For increase in the value of assets
Assets A/c (Individually) Dr.
To Revaluation A/c
(Increase in the value of assets)
2. For decrease in the value of assets
Revaluation A/c Dr.
To Assets A/c’s (Individually)
(Decrease in the value of assets)

5. 3. For increase in the amount of liabilities
Revaluation A/c Dr.
To Liabilities A/c (Individually)
(Increase in the amount of liabilities)
4. For decrease in the amount of liabilities
Liabilities A/c (Individually) Dr.
To Revaluation A/c
(Decrease in the amount of liabilities)

6. 5. For an unrecorded asset
Asset A/c Dr.
To Revaluation A/c
(Unrecorded asset brought into book)
6. For an unrecorded liability
Revaluation A/c Dr.
To Liability A/c
(Unrecorded liability brought into books)

7. 7. For distribution of profit or loss on revaluation
Revaluation A/c Dr.
To Old Partner’s Capital A/c (Individually)
(Profit on revaluation transferred to partner’s capital)
(or)
Old Partner’s Capital A/c (Individually) Dr.
To Revaluation A/c
(Loss on revaluation transferred to partner’s capital accounts)

12. THANK YOU