Asset Revaluation

Direct answer: The result is option A, a revaluation loss of ₹8,000. A decrease in liabilities is a gain of ₹22,000 because the firm’s obligation becomes smaller. A decrease in assets is a loss of ₹30,000 because the firm’s resources become less valuable. Compare the two effects: loss ₹30,000−gain ₹22,000=₹8,000 net loss. Option A is correct. Option B reverses the net result. Option C adds the two amounts to ₹52,000 and ignores that one amount is a gain offsetting the loss. Option D reports the full asset decrease but ignores the gain from the liability decrease. In the account, the asset decrease is debited ₹30,000 and liability decrease is credited ₹22,000; the remaining debit balance is ₹8,000 loss. Memory cue: asset down is loss, liability down is gain; offset them.

The increase in value is only the difference between old and new values. Old depreciation provision may be a separate adjustment so the increase is ₹24000.

The original stock is ₹1,10,000. Goods worth ₹8,000 are damaged, so that portion represents a decrease in asset value and creates a revaluation loss of ₹8,000. The stock remaining for the upward adjustment is ₹1,10,000 − ₹8,000 = ₹1,02,000. A 5% increase on this remaining amount is ₹1,02,000 × 5/100 = ₹5,100, which is a revaluation gain. The two effects have opposite signs, so the net effect is ₹5,100 gain − ₹8,000 loss = ₹2,900 loss. Thus Revaluation Account is debited by ₹2,900 overall. Option C ignores the increase and option B ignores the damage; option A correctly includes both adjustments.

Direct answer: The total revaluation loss is option A, ₹9,760. Start with debtors of ₹100,000. Bad debts of ₹6,000 are written off first, leaving ₹100,000−₹6,000=₹94,000. The required provision is 4% of this remaining balance: \(4/100\times ₹94,000=₹3,760\). Both the bad debts and the new provision are losses in revaluation, so total loss is ₹6,000+₹3,760=₹9,760. Option A is correct. Option B, ₹4,000, applies 4% to the wrong base and ignores bad debts. Option C, ₹10,000, does not follow the given calculation. Option D, ₹9,400, incorrectly treats the remaining debtors as the total loss. The important order is write off bad debts first, then calculate provision on the balance. Memory cue: reduce first, provide later.

Bad debts ₹10000 are a loss and new provision is 5 percent of ₹80000 which is ₹4000. After adjusting old provision ₹3500, extra provision is ₹500 so total additional loss is ₹10500.

Revaluation adjusts pre-admission values so it is shared by old partners in the old ratio. New ratio does not apply here.

An unrecorded patent is an asset, so it contributes a gain of ₹32,000 to the Revaluation Account. An unrecorded lawsuit liability contributes a loss of ₹47,000. Therefore, net loss = ₹47,000 − ₹32,000 = ₹15,000. The ₹15,000 profit option is incorrect because an unrecorded liability has a debit, or loss, effect. Exam tip: an unrecorded asset is a gain, while an unrecorded liability is a loss.

Decrease in plant ₹18000 and new repair liability ₹6000 are both losses. Total revaluation debit will be ₹24000.

When book values are not to be changed Memorandum Revaluation Account may be used. This is an exam hint for the alternative method.

The second part reverses the values to keep books at old values. Its effect is given among all partners in the new ratio.

The first part shows the real pre-admission revaluation effect. Therefore the loss goes to old partners in the old ratio.

Building increase ₹60000 and creditors decrease ₹20000 are gains while machinery decrease ₹30000 is a loss. Net profit is ₹50000.

The question says the new value is ₹10000 above net book value. So revaluation gain will be only ₹10000.

Decrease in investments is ₹14000 which can be covered by the ₹16000 fund. The remaining ₹2000 is a gain for old partners.

Increase in asset and cancellation of provision are both gains. Total credit will be ₹55000 + ₹6000 = ₹61000.

Decrease in liability is a gain so it appears on the credit side. Debit side records losses or increases in liabilities.

Additional provision reduces realizable debtors so it is a loss. It is debited and not credited.

Expense related to revaluation is a loss for the firm. Therefore Revaluation Account is debited and Cash Account is credited.

The expense is the firm's loss so Revaluation Account is debited. The partner who paid is owed by the firm so his capital account is credited.

C becomes a partner after admission so he has no share in old revaluation profit. This profit is shared only by old partners.

The full revaluation profit goes to old partners. Total credit to A and B accounts will be ₹40000.

When Revaluation Account is opened under the real method the asset is shown at the new value. Only in memorandum method book values may remain old.

Revaluation profit relates to the position before admission. Therefore old ratio applies and not the new ratio.

Revaluation loss relates to the old business period. For fair accounting it is adjusted among old partners in the old ratio.

A revaluation loss is borne by the old partners because it arises from conditions existing before the admission of the new partner. The partners share it in their old profit-sharing ratio, 4:3:2. The total ratio is 4 + 3 + 2 = 9, so A’s share is ₹33,000 × 4/9 = ₹14,666.67, ordinarily rounded to approximately ₹14,667. Since the amount is a loss, A’s capital account is debited, reducing A’s capital by that amount. A credit would increase capital and would be appropriate for A’s share of a profit, not a loss. Therefore option B is correct; ₹11,000 is the share of the partner with ratio 3, not A.