Question

Prepare ravotional Account of a firm A and B
creditor give up claim Rs.4000 . bill payable reduced by RS.2000. salary not get recorded in the book 500. building 100000 increased to 110000. Machinery 50000. half machinery was valued at 28000 at the other half was Written off by 7000. Prepared insurance 1500 not gat recorded in the books ​.

Answer 1

Explanation:

Adjustment and Revaluation of Assets

At the time of admission of a new partner, the assets are re-valued and liabilities are reassessed. The assets are re-valued and liabilities are reassessed so that:

The assets are overstated or understated are revalued.

The liabilities are brought in the books at their correct values

Unrecorded assets and liabilities of the firm are brought into the books of the firm

The actual position of the firm is calculated.

Profit and loss arriving on account of such revaluation up to the date of admission of a new partner may be adjusted in the partner’s capital accounts in their old profit sharing ratio.

Browse more Topics under Admission Of A Partner

Reconstitution of a Partnership Firm

Adjustment of Capital and Change in Profit Sharing Ratio Among Existing Partners

Goodwill

Learn more about Financial statement here in detail

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