Question

What to do if there are two stocks in the adjustment of the revaluation account

Answer 1

Answer:

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Explanation:

At the time of admission of a new partner, we need to revalue the existing assets and liabilities and thus, prepare the revaluation account. The value of assets may be different from its book value because, with time, the value of some assets increases while that of some decreases. Also, the value of liabilities may be different from their book values. Also, there must be some assets or liabilities that are not recorded in the books need to be recorded.

Answer 2

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.