What is meant pre acquistion profits and post acquistion profit?
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Before we introduce a new partner to the partnership firm, we must ensure all the assets and liabilities are valued correctly. So just prior to introducing a new partner revaluation account is made and subsequent adjustments are made in books of accounts. Let us take a look.
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Objectives of Business

Levels of Management
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 valuesUnrecorded assets and liabilities of the firm are brought into the books of the firmThe 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.
Suggested Videos




Objectives of Business

Levels of Management
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 valuesUnrecorded assets and liabilities of the firm are brought into the books of the firmThe 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.
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