Revaluation of Assets and Liabilities

REVALUATION OF ASSETS AND LIABILITIES The actual value of the assets and liabilities may be different from their book value as shown by the balancesheet. So Revaluation account is prepared at the time of admission of a new partner to record any increase/decrease in the value of assets and liabilities.The value of some assets may increase with time and some may show a decrease. Similarly some liabilities may also show a increase/decrease in the value. The Revaluation account is credited if there is an increase in the value of assets…

Calculation of New Profit Sharing Ratio

At the time of admission of the new partner into the firm there is a need to calculate tne new profit sharing ratio of the firm. There are different cases for the calculation of new ratio: Case 1. When only the share of new partner is given in the question In this case it is assumed that the old partners will continue to share the remaining profits in the same ratio in which they were sharing before the admission of the new partner. Illustration 1. A and B are partners…