Adjustment of Revaluation of Assets and Liabilities (Part B) Video Lecture - Commerce

memorandum revaluation account he said
what is this what is the difference
between revaluation normal randomly
evaluation memorandum revaluation has
two sections the first section the top
half is exactly the same as entries are
passed exactly like that people in case
of revaluation in the second half
however
all the above entries are reversed
therefore as a result of the revaluation
account for method revaluation there is
a change in the assets and liabilities
that we revalue but in case of a
memorandum revaluation account there
will be more change in the value of the
assets and liabilities there will be no
change in the assets and liabilities
shown in the balance sheet though they
have been revalued only the net effect
is reflected through the capital
accounts so let us check this appears to
be the same problem a retires B and C
continue but new ratio now 3 is to 2
what is the revaluation Landon building
increased by 5 lakh provision for
doubtful deaths 10000 liability of 10000
for outstanding wages so if one entry
for increase memorandum revaluation
account M sorry land and building
account debit to memorandum revaluation
is 5 lakh to Memorandum revaluation this
is 5 lakh then we have provision for
doubtful with so that's memorandum
revaluation account debit to provision
for doubtful deaths and two outstanding
wages to outstanding wages how much are
these these are 10,000 and 10,000
therefore memorandum revaluation debited
by 20000 that as land and building
appreciation is by 5 lakh as a result of
this we get a profit we get a profit of
haut like 80 which is given to the old
partners in the old profit sharing ratio
that is
equal so it becomes memorandum
revaluation account debit for like 80 so
it's closed
2a 2b 2c 160 160 and 161 or less the
same entries that we passed in the
revaluation at all now you have the
second half where the above entry will
be reversed because we do not want to
reflect the change in the value of
assets we do not want to show the
revalued figures of assets and
liabilities so memorandum revaluation
account debit to land and building we
are just reversing what is there on top
similarly outstanding wages self
standing wages account outstanding wages
account debit then provision for
doubtful debts account debit 10000 -
memorandum revaluation account 20
therefore now we get a loss because
memorandum revaluation has been debited
by 500 and credited by 20 therefore this
will now go he has retired go to the
accounts of the remaining partners be
capital account debit cease capital
account debit - memorandum revaluation
account this is what new ratio of 3 is
to 2 3 is to 2 this amount here is 4
like 80 for black 80 so we get for like
80 in the new ratio 3 is 2
288 and C would be equal to 4 to 192
with this we see land and building value
is offset prop provision for doubtful
debts outstanding wages all closed we
only have the net effect in B and C's
account and a has already left let us
see a neater presentation of this land
and building 2 memorandum memorandum
revaluation to provision for doubtful
debts and outstanding wages memorandum
revaluation to a B and C this is in the
old ratio then we reverse the above
entry all the entries memorandum
revaluation to land and building
provision for doubtful debts and
outstanding wages to memorandum
revaluation and these capitals is
capital - memorandum real revaluation
account this is new profit-sharing ratio
new profit-sharing ratio mind you what
is the net effect of these entries if
you see the net effect of this entry is
that a is retiring ace capital is
credited so 2a we get with a share of
the profit 4 lakh 80 into a is share 1/3
you get 1 lakh 60 and what is debited
b's capital and c's capital account is
debited in what ratio in the gain
english what is the gaining ratio
partner share was 1
and 1/3 this is B and C 1/3 1/3 it has
become 3/5 and toothless what was the
gain we did this once before 15 3 by 5
minus 1 by 3 so that is 9 minus 5 and
again we have 15 15 divided by 5 is 2
that's 4 no 3 2 6 6 actually 4 by 15 1
by 15 and the gaining ratio is 4 is 2 1
1 like 60 divided by 5 we get 32
therefore 32,000 and B for 128 knows
this is the net please capital account
has been debited with two like 80 and it
has been credited with one lakh 16 the
difference is 1 lakh 28,000 similarly
here sees capital account has been
debited with 1 lakh 92,000 and credited
with 1 lakh 60,000 therefore see skeptic
on David $32 this is the net effect of
the entries of the memorandum
revaluation account as we have discussed
in admission the third method actually
involves this particular entry only