Revaluations, Financial Accounting


Partners rarely revalue their assets and any revaluations may be carried out when a new partner is being admitted or an old partner is retiring.  

To facilitate the process a revaluation account is opened whereby any revaluation gains are credited to he account while revaluation losses are debited to the account.  The balance in this account represents a profit or loss on revaluation, which is now transferred or closed off to the partners’ capital accounts according to their Profit Sharing Ratio (PSR)

On the profit or loss on revaluation

1) If the revaluation is carried out when a new partner is being admitted, then the new partner is not entitled to receive any share of the gain nor bear any loss.

Entries for the gain or loss are made only in the old partners’ capital accounts according to the old PSR.

2) If the revaluation is carried out on retirement of a partner, then the retiring partner is still entitled to a share of profit or loss. Therefore, the gain or loss will be adjusted for in all the partners’ capital accounts including the retiring one according to the old PSR.

3) In any other situation, e.g. the revaluation is carried out when there is a change in PSR then any gain or loss will be adjusted for in all the partners capital accounts but still the old PSR.

Posted Date: 12/11/2012 6:23:01 AM | Location : United States

Related Discussions:- Revaluations, Assignment Help, Ask Question on Revaluations, Get Answer, Expert's Help, Revaluations Discussions

Write discussion on Revaluations
Your posts are moderated
Related Questions

Determine balance sheet: Income Statements Year Ended December 31, 20X8   Insure Co. Go-med Co. Sales $3,900,000

MAINTENANCE Trustees may pay to the parent or guardian out of income of a fund held on the trust for an infacnt reasonable sums for his maintenance and education, having regard

Q. Conclusion on Overtrading? The majority of the evidence suggests that our company is moving into an overtrading situation, although the evidence is not conclusive. Current p

Analyze one completed M&A transaction from recent times There are two main requirements (1) an analysis of the strategic and economic rationale behind the merger, and (2) an analy

Disclaimer of leases In principle where the bankrupt is a lessee the lease cannot be disclaimed without leave of the court; but such leave is not required in the following case

In order to enhance sales from their present annual $35 million, ABC Company, a retailer, is considering more liberal credit standards. Presently, the firm has an average collectio

WILL SOMEONE PLEASE ASSIST ME WITH THIS ASSISGNMENT Preview Company, a diversified manufacturer, has five divisions that operate throughout the United States and Mexico. Preview ha

Question: You are a member of a large accounting firm which is responsible for preparing financial reports, including statements and notes to the accounts; and for advising sta

This lab assignment will correspond to developing a cash flow budget with an operating loan. There is on lab exercise listed below. Additionally, there are two assignment questions