Question

Q.3 STOCK IS OVERVALUED BY 25% . BOOK VALUE OF STOCK IS Rs. 25,000. IN THIS CASE REVALUATION A/C IS​

Answer 1

Answer:

Rs. 5,000 is overvalued (25,000 / 1.25)

Explanation:

Answer 2

Given:  book value of stock = 25000

            stock overvalued by 25%

To Find:  show the Revaluation A/C

Solution:          

                                IN the books of Revaluation A/C

    Particulars                      Amount          Particulars                       Amount      

                                                                By  stock                                6250  

                           

working note:  

calculation of overvalued stock    

  value of stock = 25000

   stock overvalued by 25%

    so, stock will be overvalued by = (25000 x 25%)

                                                      =   6250

   therefore, overvalued stock amount will be = (25000+ 6250)

                                                                            =  30250

Note:

Revaluation A/C:  An increase in an asset's value in order to reflect the current market value of the asset. ... Revaluation is that the positive difference between an asset's fair market price and its original cost, minus depreciation.