Adjustment for Revaluation of Assets and Liabilities

During the death or retirement of a partner, there may be some assets which may not have been shown at their current values. Likewise, there may be a few liabilities which have been shown at a value that is distinct from the accountability to be met by the enterprise. However, there may be a few unrecorded liabilities and assets which is required to be imbibed into books. As comprehended in case of admission of a partner, a Revaluation A/c is outlined with an aim to determine the net gain (loss) on revaluation of liabilities and assets and getting unrecorded items into enterprise’s books and the same is transferred to the capital a/c of the partners comprising the retiring/dead partners in their Current profit sharing ratio. Journal entries to be passed are mentioned below:

For an increase in the value of assets :

Assets A/c (Individually)

To Revaluation A/c

(Increase in the value of assets)

Dr.
For a decrease in the value of assets :

Revaluation A/c

To Assets A/c (Individually)

(Decrease in the value of assets)

Dr.
For an increase in the number of liabilities :

Revaluation A/c

To Liabilities A/c (Individually)

(Increase in the number of liabilities)

Dr.
For a decrease in the number of liabilities :

Liabilities A/c (Individually)

To Revaluation A/c

(Decrease in the number of liabilities)

Dr.
For an unrecorded asset :

Assets A/c

To Revaluation A/c

(Unrecorded asset brought into a book)

Dr.
For an unrecorded liability :

Revaluation A/c

To Liability A/c

(Unrecorded liability brought into books)

Dr.
For distribution of profit or loss on revaluation :

Revaluation A/c

To All Partners’ Capital A/c (Individually)

(Profit on revaluation transferred to partner’s capital)

OR

All Partners’ Capital A/c (Individually)

To Revaluation A/c

(Loss on revaluation transferred to partner’s capital accounts)

Dr.

(The above mentioned Journal entries are fetched from NCERT website)

Also Read: What is a Fixed Asset? 

The above mentioned is the concept that is explained in detail about Adjustment for Revaluation of Assets and Liabilities for the class 12 Commerce students. To know more, stay tuned to BYJU’S.

Leave a Comment

Your email address will not be published. Required fields are marked *