Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter - 3
Reconstitution of a Partnership Firm
Retirement / Death of a Partner
Revaluation of Assets and Reassessment of Liabilities
Assets and liabilities of a firm must be revalued at the time of retirement / death of a partner. The reason is that the actual value of assets and liabilities may be different from those shown in the Balance Sheet. Not only that, there may be some unrecorded assets and liabilities which need to be brought into books.
Revaluation of Assets and Reassessment of Liabilities
Revaluation A/c
It is prepared to ascertain net gain / loss on revaluation of assets and liabilities and bringing unrecorded items into firm’s books.
The Journal entries to be passed for this purpose are as follows:
1. For increase in the value of assets
Assets A/c’s (Individually) Dr.
To Revaluation A/c
(Increase in the value of assets)
2. For decrease in the value of assets
Revaluation A/c Dr.
To Assets A/c’s (Individually)
(Decrease in the value of assets)
3. For increase in the amount of liabilities
Revaluation A/c Dr.
To Liabilities A/c (Individually)
(Increase in the amount of liabilities)
4. For decrease in the amount of liabilities
Liabilities A/c’s (Individually)
To Revaluation A/c
(Decrease in the amount of liabilities)
5. For an unrecorded asset
Assets A/c Dr.
To Revaluation A/c
(Unrecorded asset brought into book)
6. For an unrecorded liability
Revaluation A/c Dr.
To Liability A/c
(Unrecorded liability brought into books)
7. For distribution of profit or loss on revaluation
Revaluation A/c Dr.
To All Partners’ Capital A/c’s (Individually)
(Profit on revaluation transferred to partner’s capital)
OR
All Partners’ Capital A/c’s (Individually) Dr.
To Revaluation A/c
(Loss on revaluation transferred to partner’s capital accounts)
Amount
Particulars
Amount
Particulars
Decrease in value of Assets
XXX
Increase in value of Liabilities
XXX
Unrecorded Liabilities
XXX
XXXXX
XXXXX
REVALUATION ACCOUNT
Profit on Revaluation transferred
to Partner’s Capital / Current A/c
in profit sharing ratio
XX
Increase in value of Assets
XXX
Decrease in value of Liabilities
XXX
Unrecorded Assets
XXX
Loss on Revaluation transferred
to Partner’s Capital / Current A/c
in profit sharing ratio
XX
Adjustment of Accumulated Profits and Losses
The retiring/deceased partner is entitled to his/her share in the accumulated profits and is also liable to share the accumulated losses, if any.
These accumulated profits or losses belong to all the partners and should be transferred to the capital accounts of all partners in their old profit sharing ratio.
(i) For transfer of accumulated profits (reserves),
Reserves A/c / Profit & Loss A/c Dr.
To All Partners’ Capital A/c’s (Individually)
(Reserves transferred to all partners’ capital account’s in old ratio).
(ii) For transfer of accumulated losses
All Partners’ Capital A/c’s (Individually) Dr.
To Profit and Loss A/c
(Accumulated loss transferred to all partners’ capital account in old ratio)
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.