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Revaluation of Assets and Liabilities. |
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Answer» At the time of admission of a new partner, with a object to no injustice with old and new partner, question of revaluation of assets and liabilities arise. To record the accounting effects of revaluation of assets and liabilities, revaluation account is prepared in the books of firm. It is also called as profit and loss adjustment account. Decrease in assets and increase in liabilities are shown on debit side of Revlauation Account and increase in assets and decrease in liabilities are shown on credit side of Revaluation Account. Profit or Loss of revaluation account is distribution among the old partners in old profit-loss sharing ratio. |
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