Скачать или смотреть Class—12th || ADMISSION OF A PARTNER || UNDERVALUED & OVERVALUED || CBSE || ICSE || All State Board

1. Background: Admission of a Partner

When a new partner is admitted to a partnership firm, adjustments are made for:
• Goodwill
• Revaluation of Assets & Liabilities
• Capital accounts of partners

Reason for revaluation: To ensure that any gain or loss in the value of assets and liabilities till the date of admission is shared by the old partners in their old profit-sharing ratio.

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2. Meaning of Undervalued & Overvalued

Undervalued Asset
• Meaning: When the book value of an asset is less than its actual current market value.
• Example: Furniture shown in books at ₹40,000 but market value is ₹50,000.
→ Asset is undervalued by ₹10,000.
• Treatment in Revaluation Account:
• Increase in value is credited to Revaluation A/c (gain for old partners).

Overvalued Asset
• Meaning: When the book value of an asset is more than its actual current market value.
• Example: Stock shown in books at ₹70,000 but market value is ₹60,000.
→ Asset is overvalued by ₹10,000.
• Treatment in Revaluation Account:
• Decrease in value is debited to Revaluation A/c (loss for old partners).

3. Liabilities Case
• Overvalued Liability: Liability shown more in books than it actually is.
→ Decrease liability = gain (credit Revaluation A/c).
• Undervalued Liability: Liability shown less in books than actual.
→ Increase liability = loss (debit Revaluation A/c).
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