Example: Revaluation of Assets Video Lecture | Accountancy CUET Preparation - Commerce

a short problem the following is the
balance sheet of a and B as on 31st
December capital accounts are 10 lakh
sorry 1 luck 1 lakh and 80,000 building
1 lakh furniture 30,000 stock 50,000
better 60 and Bank 40,000 on admissions
he brought 60,000 as capital assets and
liabilities revalued 6000 included in
creditors is no longer a liability so
it's not a liability we will remove the
liabilities against a creditors account
debit to revaluation 4000 due to
creditors not included in the list of
creditors so we have to bring it in the
creditors revaluation account debit to
creditors contingent liability had to be
paid so it becomes revaluation account
debit to bad assets are then revalued
building has increased stock has
decreased debtors letters has come down
since you have to be a provision for
doubtful debts we will create a
provision account show the evaluation
account partners capital accounts and
balance sheet after revaluation I will
quickly go through the journal entries I
will prepare the journal entries and we
will look at the effect in the accounts
there after she has brought in capital
so cash account debit to cease capital
that is one amount is 60,000
next four three six thousand included
and creditors no longer a liability that
is creditors account debit amount is six
thousand I am doing all the profits
together this is six thousand is a
profit this is a loss as an additional
liability this liability had to be paid
building this is also again writing it
together building account debit the
value is increased by twenty thousand
two revaluation how much is this twenty
six thousand what else has happened
four thousand you to creditors is not
included so have to bring that into the
books revaluation account debit to
creditors amount is four thousand
contingent liability had to be paid so
revaluation account debit to Bank I'm
paying the amount I'm not creating a new
liability account and paying it so
revaluation account debit to bank so
this is taken care this is taken care
stock value has come down so to stock by
ten thousand it has come down it was
fifty thousands become forty thousand
and to provision for doubtful next an
amount of four thousand we are creating
a provision it is a revalue assume that
it's not being written off only a
provision has been created 15 this
becomes 19 thousand so there is a profit
of seven thousand revaluation account
was debited by 19 thousand this is a
loss increase in liabilities and
decrease in assets but we made a gain of
twenty six thousand therefore the net
profit is seven thousand revaluation
account debit 2a and 2b what is the
profit sharing ratio
nothing has been mentioned therefore we
assume it is equal devaluation account
profit is seven thousand three thousand
five hundred and three thousand five
hundred what is the effect of all this
the effect of all this is that building
would have increased in value
one lakh twenty thousand stock would
have come down in value to forty
thousand debtors would be shown at sixty
thousand less provision for doubtful
deaths of six thousand and the bank
balance money would have come in
amounting to sixty thousand so we have
forty thousand plus sixty thousand one
line and one thousand which has been
paid
therefore bank balance should actually
be ninety nine thousand similarly there
would be a change in s capital account
since it was one lakh plus we have three
thousand five hundred and B one lakh
plus three thousand five hundred
creditors there has been a change there
has been a reduction in predictors by
six thousand and an increase in
creditors by four thousand therefore
that is seventy eight thousand would be
the balance of the creditors this would
be the result of all the entries that we
have passed let us take a quick look at
the Neeta presentation.we evaluation
account debit to creditors increase in
liability creditors not in the list
revaluation this is paid contingent
liability paid stock was undervalued
sorry we had to reduce the value of
stock by ten thousand two debtors
we will write this as provision for
doubtful deaths four thousand creditor
six thousand and building twenty
thousand so that we had a total gain of
seven thousand distributed equally to a
and me this is the revaluation what
happened in the partners capital account
one lakh 1 lakh brought
she brought in sixty thousand
revaluation was given to a and B
therefore this is the balance in the
capital accounts capital accounts one
lakh three five hundred one by three
five hundred and sixty thousand and
creditors that we are discussed before
it was eighty and it has become seventy
eight thousand not because of these two
entries building increased in value
furniture is the same stock forty
thousand letters less provision for
doubtful death is 56 thousand Bank as we
had said is ninety nine thousand this
because sixty thousand rotten and one
thousand betas some contingent liability
which was P so ninety nine thousand
total this is the final balance sheet
after C is admitted and profit on
revaluation is with affected