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A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account?
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A plant with original cost of rupees 50 lakh was revalued after 2 year...
Impact of Downwards Revaluation on Profit and Loss Account
Original Revaluation
The original cost of the plant was rupees 50 lakh. After 2 years, it was revalued resulting in a credit of rupees 400000 to the revaluation surplus account.
Downwards Revaluation
Due to COVID-19, the plant value had gone down by rupees 5 lakh in 2019-20. The management decided to revalue the plant again.
Impact on Profit and Loss Account
The impact of the downwards revaluation on the profit and loss account is as follows:
1. Decrease in the value of the plant: The downwards revaluation resulted in a decrease in the value of the plant by rupees 5 lakh.
2. Decrease in revaluation surplus: The revaluation surplus account will be debited with the amount of downwards revaluation, resulting in a decrease in the surplus.
3. Impact on profit and loss account: The decrease in the revaluation surplus will be charged to the profit and loss account as an expense. Therefore, the profit and loss account will show a decrease in profit by the amount of downwards revaluation.
Conclusion
The downwards revaluation of the plant due to COVID-19 will have a negative impact on the profit and loss account. The decrease in the revaluation surplus will be charged to the profit and loss account as an expense, resulting in a decrease in profit.
Original Revaluation
The original cost of the plant was rupees 50 lakh. After 2 years, it was revalued resulting in a credit of rupees 400000 to the revaluation surplus account.
Downwards Revaluation
Due to COVID-19, the plant value had gone down by rupees 5 lakh in 2019-20. The management decided to revalue the plant again.
Impact on Profit and Loss Account
The impact of the downwards revaluation on the profit and loss account is as follows:
1. Decrease in the value of the plant: The downwards revaluation resulted in a decrease in the value of the plant by rupees 5 lakh.
2. Decrease in revaluation surplus: The revaluation surplus account will be debited with the amount of downwards revaluation, resulting in a decrease in the surplus.
3. Impact on profit and loss account: The decrease in the revaluation surplus will be charged to the profit and loss account as an expense. Therefore, the profit and loss account will show a decrease in profit by the amount of downwards revaluation.
Conclusion
The downwards revaluation of the plant due to COVID-19 will have a negative impact on the profit and loss account. The decrease in the revaluation surplus will be charged to the profit and loss account as an expense, resulting in a decrease in profit.
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A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account?
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A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account?.
A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account?.
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A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account?, a detailed solution for A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? has been provided alongside types of A plant with original cost of rupees 50 lakh was revalued after 2 years resulting in credit to revaluation surplus account of rupees 400000. towards the year and of 2019-20 due to covid-19 in the plan value had gone down by rs 5 lakh and accordingly management decided to revaluate the same. What shall be the impact of this downwards revaluation on the profit and loss account? theory, EduRev gives you an
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