Asset Revaluation

A certain receivable claim is an asset. Discovery of an unrecorded asset is credited to Revaluation Account.

Decrease in debtors is a loss and equal decrease in creditors is a gain. Since both are equal the net effect is zero.

In real method value change first goes to Revaluation Account. Then its profit or loss is distributed among old partners.

The governing concept is that revaluation compares the old carrying amount of an asset with its revised value, not its original gross cost with the revised value. The old gross machinery balance is ₹5,00,000, and the existing depreciation provision is ₹80,000. Thus, old net book value = ₹5,00,000 − ₹80,000 = ₹4,20,000. The revised net value is ₹3,90,000, so the decrease is ₹4,20,000 − ₹3,90,000 = ₹30,000. This decrease is a revaluation loss and is debited to the Revaluation Account. ₹1,10,000 incorrectly ignores the provision, while the other figures are balances rather than the loss.

Obsolete part is a loss of ₹50000 and 10 percent increase on remaining ₹150000 is a gain of ₹15000. Net loss is ₹35000.

Rent paid in advance is an asset and the expired part is no longer beneficial. Therefore asset decrease of ₹10000 is debited.

Revaluation adjusts value changes before admission. Therefore its result is shared by old partners in old ratio.

When there is no change in value there is no gain or loss. Therefore no entry is made in Revaluation Account.

Old provision is sufficient so no additional provision is created. Only bad debts of ₹4000 are a loss.

Increase in building value is part of asset revaluation. Goodwill premium and capital are recorded in separate accounts.

Discount from creditors reduces liability. Decrease in liability is a gain so Revaluation Account is credited.

Accepted value is ₹15000 so decrease from book value is ₹25000. In revaluation the loss is based on the accepted new value.

The increase in the asset’s value from ₹50,000 to ₹62,000 creates a revaluation gain of ₹12,000. Creating a repair provision of ₹7,000 is a loss or charge against the Revaluation Account, so it must be deducted. Therefore, net gain = ₹12,000 − ₹7,000 = ₹5,000. ₹12,000 represents only the asset increase; the repair provision must also be considered.

Revaluation loss relates to assets and liabilities before admission. Therefore it must be shared by old partners in the old ratio.

The stock has decreased in value from ₹94,000 to ₹88,000, resulting in a loss of ₹6,000. The admitted insurance claim of ₹3,000 is treated as a gain in the Revaluation Account. Therefore, net loss = ₹6,000 − ₹3,000 = ₹3,000. Hence, option A is correct. Exam tip: Adjust a decrease in an asset as a loss and an admitted insurance claim as a gain.

The governing concept is that an expense or asset that is no longer expected to provide future benefit must be written off during reconstitution. The total deferred advertisement expenditure is ₹45,000, but only ₹15,000 remains useful. Therefore, the portion that has lost its future benefit is calculated as ₹45,000 − ₹15,000 = ₹30,000. This written-off amount is a loss to the firm, so Revaluation Account is debited with ₹30,000. The useful balance of ₹15,000 continues as an asset and is not charged to Revaluation Account. Hence option B is correct; option A represents the retained useful amount, while options C and D ignore the partial write-off.

A's correct share is ₹75000 × 7/15 = ₹35000 but he received ₹37500 equally. So A received ₹2500 more.

The governing principle is that a decrease in the recorded value of an asset is treated as a loss on revaluation. The books show cash of ₹50,000, whereas physical verification establishes that only ₹48,000 exists. The shortage is therefore ₹50,000 − ₹48,000 = ₹2,000. Since the firm has suffered this loss before the incoming partner joins, the amount is recorded by debiting Revaluation Account by ₹2,000 and crediting Cash Account by the same amount. Option A is correct. A credit would represent a gain, charging the new partner is inappropriate without a specific agreement, and no entry would fail to adjust the books to the verified cash balance.

Losses exceed gains by ₹15000 so there is a revaluation loss. It is debited to old partners capital accounts in old ratio.

Creditors decrease by ₹6500. Decrease in liability is a gain and Revaluation Account is credited.

The governing concept is that every change in the value or existence of an asset is considered in Revaluation Account. The recorded furniture falls from ₹80,000 to ₹68,000, creating a loss of ₹12,000. At the same time, the previously unrecorded furniture is an asset discovered during reconstitution, so it creates a gain of ₹9,500 and is debited to Furniture Account while Revaluation Account is credited. The net effect is ₹12,000 loss − ₹9,500 gain = ₹2,500 net loss. Therefore option A is correct. Option C ignores the newly discovered asset, option B ignores the reduction, and option D incorrectly adds both amounts as losses.

When changed values appear in the final balance sheet the real revaluation method is used. In memorandum method book values are retained.

Tools increase by ₹23000 so it is a gain. When an asset increases Revaluation Account is credited.

Decrease in building is 6 percent of ₹450000 which is ₹27000. Decrease in an asset is a revaluation loss.

The required new provision is ₹1,50,000 × 8% = ₹12,000. Since ₹5,000 has already been provided, only the increase of ₹12,000 − ₹5,000 = ₹7,000 is recorded as a loss in the Revaluation Account. ₹12,000 represents the total new provision, not the additional loss. In such questions, compare the new provision with the existing provision and record only the difference.