Revaluation of Assets and Liabilities

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Admission of partnership
In this session I explain you clearly the purpose of creating revaluation of assets and liabilities.
Everyone should clear about the revaluation before proceeding the problem of calculation.
Revaluation is important concept when a new partner is entering inside the business. He or she should not get any benefits or Appreciation in the previous year and he or she should not bear any loss.
Revaluation of assets and liabilities is done by the following reasons:
1. by the interest of all the partners
2. Calculate on old ratio
3. It is natural that revaluation to be carried out at time of Admission
4. All the changes are recorded in Revaluation account also called Profit and Loss Adjustment Account.
5. P/L Debit or Credit is transferred to Old partner in Old ratio.
The next concept is memorandum revaluation
In memorandum revaluation, revaluation of assets and liabilities will not be done instead it is transferred as it is and the profit is transferred to the old partners in their profit sharing ratio and reversal entries is carried out again and balance transferred to all the partners in their new profit sharing ratio.
Next session i teach the problem calculation with steps.

All the best and Take care
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