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In case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio), which account is debited?
- a)Plant and machinery
- b)Revaluation A/c
- c)partners'capital A/c
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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In case of depreciation provided on plant and machinery (at the time o...
Debiting of Revaluation A/c in case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio)
When there is a change in the profit sharing ratio of the partners of a firm, it is necessary to revalue the assets and liabilities of the firm. This is done to ensure that the new profit sharing ratio reflects the true value of the assets and liabilities of the firm.
One of the assets that need to be revalued is the plant and machinery of the firm. If the plant and machinery have depreciated in value, then the revaluation will result in a decrease in the value of the asset. This decrease in value is known as depreciation provided on plant and machinery.
To account for this depreciation provided on plant and machinery, the Revaluation A/c is debited. This is because the Revaluation A/c is a nominal account that is used to record the adjustments made to the assets and liabilities of the firm.
By debiting the Revaluation A/c, the decrease in the value of the plant and machinery is recorded. This decrease in value is then distributed among the partners as per their new profit sharing ratio.
It is important to note that the Plant and Machinery A/c is not debited in this case. This is because the Plant and Machinery A/c is a real account that records the value of the plant and machinery as per the books of accounts. The depreciation provided on plant and machinery is an adjustment made to this value and is recorded in the Revaluation A/c.
When there is a change in the profit sharing ratio of the partners of a firm, it is necessary to revalue the assets and liabilities of the firm. This is done to ensure that the new profit sharing ratio reflects the true value of the assets and liabilities of the firm.
One of the assets that need to be revalued is the plant and machinery of the firm. If the plant and machinery have depreciated in value, then the revaluation will result in a decrease in the value of the asset. This decrease in value is known as depreciation provided on plant and machinery.
To account for this depreciation provided on plant and machinery, the Revaluation A/c is debited. This is because the Revaluation A/c is a nominal account that is used to record the adjustments made to the assets and liabilities of the firm.
By debiting the Revaluation A/c, the decrease in the value of the plant and machinery is recorded. This decrease in value is then distributed among the partners as per their new profit sharing ratio.
It is important to note that the Plant and Machinery A/c is not debited in this case. This is because the Plant and Machinery A/c is a real account that records the value of the plant and machinery as per the books of accounts. The depreciation provided on plant and machinery is an adjustment made to this value and is recorded in the Revaluation A/c.
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In case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio), which account is debited?a)Plant and machineryb)Revaluation A/cc)partnerscapital A/cd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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In case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio), which account is debited?a)Plant and machineryb)Revaluation A/cc)partnerscapital A/cd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about In case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio), which account is debited?a)Plant and machineryb)Revaluation A/cc)partnerscapital A/cd)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In case of depreciation provided on plant and machinery (at the time of change in profit sharing ratio), which account is debited?a)Plant and machineryb)Revaluation A/cc)partnerscapital A/cd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
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