Question

What is memorandum revaluation account when and how it is prepared?

Answer 1

Memorandum Revaluation Account is when new assets and liabilities are added to the new balance sheet in the older form of assets and liabilities. In this the value of the assets and liabilities are unchanged but the effect is given through the capital account of the partner. 

Memorandum Revaluation Account is made at the time of initiation and retirement of a firm. The purpose of this account is to:

(i) Record the change in the value of assets and liabilities of the firm. 

(ii) End the changes that occurred earlier. 

Answer 2

Explanation:

Memorandum revaluation account is prepared when at the time of admission/retirement of partner, the partnership firm does not want to change the value of assets and liabilities in the balance sheet but want to give effect of it through partner's capital account.