- The document discusses revaluation account, which is used when assets and liabilities are revalued upon changes to a partnership such as a new partner joining. - It provides an example where machinery is depreciated, land and buildings are appreciated, creditors are written back, and other adjustments are made. - The revaluation account debits reductions in value and credits increases, with any overall gain or loss transferred to partner's capital accounts in their old profit sharing ratios.

1. REVALUATION ACCOUNT
Class : XII
Subject : Accountancy
Ms. GEETA HANDA
Geeta Handa

2. Geeta Handa
PGT Accountancy
• 20 years experience of teaching
accountancy.
• 14 years experience of checking
accountancy papers of CBSE
• Worked as examiner for conducting
practical exam of accountancy.
geet7handa@gmail.com
Geeta Handa

3.  When :- At Reconstitution of Partnership Firm:
Change in Ratio ; Admission ;
Retirement & Death of a Partner
 Why :- To Revalue the Assets &
To Reassess the Liabilities

4.  Nature :- Nominal Account
 Golden Rule Applied :- Debit all Expenses / Losses
Credit all Gains/Profits

5. Particulars Rs. Particulars Rs.
Revaluation AccountDr. Cr.
Geeta Handa

6. Particulars Rs. Particulars Rs.
To Asset A/c --------- By Assets A/c --------
To Liabilities A/c -------- By Liabilities A/c ---------
To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c -------
To Provision For Doubt Debts -------- By Provision For Doubt Debts --------
To Gain (Profit) transferred to
Partners’ Capital / Current A/c
( Balance Amount ) ---------
By Loss transferred to Partners ‘
Capital/ Current A/c
( Balance Amount ) ----------
Revaluation AccountDr. Cr.
Geeta Handa
* Note : Current A/c in case of Fixed Capitals

7. Particulars Rs. Particulars Rs.
To Asset A/c --------- By Assets A/c --------
To Liabilities A/c -------- By Liabilities A/c ---------
To Unrecorded Liabilities A/c -------- By Unrecorded Asset A/c -------
To Provision For Doubt Debts -------- By Provision For Doubt Debts --------
To Profit transferred to :
A’s Capital / Current A/c -------
B’s Capital / Current A/c ------- ---------
By Loss transferred to :
A’s Capital / Current A/c -------
B’s Capital / Current A/c ------- ----------
Revaluation AccountDr. Cr.
Geeta Handa
* Note : Always distribute Profit /Loss of Revaluation A/c in Old Partners in Old Ratio

8. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
Geeta Handa

9. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Revaluation A/c Dr.
To Machinery A/c
( Being Machinery depreciated)
16,000
16,000

10. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000
Revaluation AccountDr. Cr.
Geeta Handa

11. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
Geeta Handa

12. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Land and Building A/c Dr.
To Revaluation A/c
( Being the assets revalued)
56,000
56,000

13. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
Revaluation AccountDr. Cr.
Geeta Handa

14. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
(c) Creditors were written back by Rs.5,000.
Geeta Handa

15. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Creditors A/c Dr.
To Revaluation A/c
( Being the Creditors reassessed)
5,000
5,000

16. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
By Creditors A/c 5,000
Revaluation AccountDr. Cr.
Geeta Handa

17. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
(c) Creditors were written back by Rs.5,000.
(d) Unrecorded Liability towards suppliers was Rs.3,000.
Geeta Handa

18. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Revaluation A/c Dr.
To Creditors A/c
( Being the Creditors reassessed)
3,000
3,000

19. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
Revaluation AccountDr. Cr.
Geeta Handa

20. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
(c) Creditors were written back by Rs.5,000.
(d) Unrecorded Liability towards suppliers was Rs.3,000.
(e) A provision of Rs.2,000 was made for an Outstanding Bill for Repairs.
Geeta Handa

21. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Revaluation A/c Dr.
To Outstanding Repairs A/c
( Being a provision made for
unrecorded liability of repairs )
2,000
2,000

22. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
To Outstanding Repairs A/c 2,000
Revaluation AccountDr. Cr.
Geeta Handa

23. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
(c) Creditors were written back by Rs.5,000.
(d) Unrecorded Liability towards suppliers was Rs.3,000.
(e) A provision of Rs.2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Investments were valued at Rs.15,000.
Geeta Handa

24. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Investments A/c Dr.
To Revaluation A/c
( Being Investments recorded )
15,000
15,000

25. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
To Outstanding Repairs A/c 2,000 By Investments A/c 15,000
Revaluation AccountDr. Cr.
Geeta Handa

26. Example: 1 A and b are Partners in a firm sharing Profits in the ratio 3 : 2. At the
time of admission of a partner C Assets and Liabilities were revalued as follows:
(a) Machinery is depreciated by 20%.( Book value of machinery Rs.80,000)
(b) Land and Building to be appreciated by Rs.56,000.
(c) Creditors were written back by Rs.5,000.
(d) Unrecorded Liability towards suppliers was Rs.3,000.
(e) A provision of Rs.2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Investments were valued at Rs.15,000.
(g) A Provision for Bad Debts @10% was made on Sundry Debtors .
( Sundry Debtors Rs.50,000)
Geeta Handa

27. Geeta Handa
Journal Entry
Date Particulars L.F Dr. ( Rs.). Cr. (Rs. )
Revaluation A/c Dr.
To Provision for Bad Debts A/c
( Being 10% Provision created on
Debtors of Rs.50,000)
5,000
5,000

28. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
To Outstanding Repairs A/c 2,000 By Investments A/c 15,000
To Provision for Bad Debts A/c 5,000
Revaluation AccountDr. Cr.
Geeta Handa

29. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
To Outstanding Repairs A/c 2,000 By Investments A/c 15,000
To Provision for Bad Debts A/c 5,000
To Gain transferred to Partners’
Capital A/c (Balance Amount) 50,000
76,000 76,000
Revaluation AccountDr. Cr.
Geeta Handa

30. Particulars Rs. Particulars Rs.
To Machinery A/c 16,000 By Land and Building A/c 56,000
To Creditors A/c 3,000 By Creditors A/c 5,000
To Outstanding Repairs A/c 2,000 By Investments A/c 15,000
To Provision for Bad Debts A/c 5,000
To Gain transferred ( 3 : 2) to :
A’s Capital A/c 30,000
B’s Capital A/c 20,000 50,000
76,000 76,000
Revaluation AccountDr. Cr.
Geeta Handa

31. Points to be Remember :-
• Debit side for Losses / Credit Side for Profits
• Divide the Profit /Loss of Revaluation in Old Ratio.
Geeta Handa

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