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MEMORANDUM REVALUATION ACCOUNT FORMAT

Posted on June 20, 2019 By commerceiets 2 Comments on MEMORANDUM REVALUATION ACCOUNT FORMAT

Table of Contents

  • MEMORANDUM REVALUATION ACCOUNT
  • JOURNAL ENTERIES        
  • MEMORANDUM REVALUATION ACCOUNT FORMAT         
  • DIFFERENCE BETWEEN REVALUATION ACCOUNT AND MEMORANDUM REVALUATION ACCOUNT

MEMORANDUM REVALUATION ACCOUNT

Memorandum Revaluation Account is prepared in case when partners do not want to alter or revise the value of assets and liabilities. It is a Nominal Account. The Memorandum Revaluation Account Format consist of two parts:

FIRST PART: In this part, the increase in assets and decrease in liabilities is shown at the Credit side. Similarly, the increase in Liabilities and decrease in the Assets are shown at the debit side. The net effect whether it is profit or loss is distributed to the old partners in their old ratio.

SECOND PART: In this part, the increase in assets and decrease in liabilities is shown at the Debit side and increase in liabilities and decrease in assets are shown at the Credit side of this account. The net effect whether is it profit or loss is distributed to the all partners in the new ratio.

The reason behind this is that the reverse entries are done to restore the old figures of assets and liabilities. It is done at the admission of the partner so that the new partner will also participate in restoring the old figures.

JOURNAL ENTERIES        

    

DATE PARTICULARS
  FOR INCREASE IN THE VALUE OF ASSETS AND DECREASE IN THE VALUE OF LIABILITIES  
Assets A/c Dr.
Liabilities A/c Dr.       
To Memorandum Revaluation A/c
  FOR DECREASE IN THE VALUE OF ASSETS AND INCREASE IN THE VALUE OF LIABILITIES  
Memorandum Revaluation A/c Dr.        
To Assets A/c Dr.        
To Liabilities A/c Dr.
  FOR TRANSFERRING THE BALANCE OF FIRST PART OF THE MEMORANDUM REVALUATION ACCOUNT
-IN CASE OF PROFIT
Memorandum Revaluation A/c Dr.          
To old partner’s capital A/c
-IN CASE OF LOSS
Old Partner’s Capital A/c Dr.          
To Memorandum Revaluation A/c
  FOR REVERSING INCREASE IN THE VALUE OF ASSETS AND DECREASE IN THE VALUE OF LIABILITIES
Memorandum Revaluation A/c Dr.          
To Assets A/c Dr.          
To Liabilities A/c Dr.
  FOR REVERSING DECREASE IN THE VALUE OF ASSETS AND INCREASE IN THE VALUE OF LIABILITIES
Assets A/c Dr.
Liabilities A/c Dr.       
To Memorandum Revaluation A/c
  FOR TRANSFERRING THE BALANCE OF SECOND PART OF THE MEMORANDUM REVALUATION ACCOUNT
-IN CASE OF PROFIT
Old Partner’s Capital A/c Dr.          
To Memorandum Revaluation A/c
-IN CASE OF LOSS
Memorandum Revaluation A/c Dr.          
To old partner’s capital A/c

MEMORANDUM REVALUATION ACCOUNT FORMAT         

DR.            MEMORANDUM REVALUATION ACCOUNT           CR.

PARTICULARS ₹ PARTICULARS ₹
To Assets A/c
(Decrease in Assets)
To Liabilities A/c
(Increase in Liabilities)
To Provisions A/c
(Creation of Provisions)
To Profit (B.F.)
(Old Partner’s Capital A/c in Old ratio)  
                    By Assets A/c
(Increase in Assets)
By Unrecorded Assets
By Liabilities A/c
(Decrease in Liabilities)
By Provisions A/c
(Decrease in Provision)
By Loss (B.F.)
(Old Partner’s Capital A/c in Old ratio)
 
       
To Assets A/c
(Increase in Assets)
To Unrecorded Assets
To Liabilities A/c
(Decrease in Liabilities)
To Provisions A/c
(Decrease in Provision)
To Loss (B.F.)
(All Partner’s Capital A/c in New ratio)
  By Assets A/c
(Decrease in Assets)
By Liabilities A/c
(Increase in Liabilities)
By Provisions A/c
(Creation of Provisions)
By Profit (B.F.)
(All Partner’s Capital A/c in New ratio)  
 

It may be noted that the value of assets and liabilities except the Cash and Capital Accounts, will not change and they will continue to appear at their old values in the Balance Sheet of the firm after reconstitution.

DIFFERENCE BETWEEN REVALUATION ACCOUNT AND MEMORANDUM REVALUATION ACCOUNT

       

BASIS OF DIFFERENCE REVALUATION ACCOUNT MEMORANDUM REVALUATION ACCOUNT
OBJECTIVE   It is prepared to know the effect on account of revaluation of asset and liabilities on the capital of old partners only. It is prepared o know the net effect on account revaluation of assets and liabilities o the capital of old and new partners.
PREPARATION It is prepared in case partners want to alter or revise the value of assets and liabilities. It is prepared in case partners do not want to revise or alter the value of assets and liabilities.
FIGURES IN BALANCE SHEET Figures in Balance sheet are shown at the revised values. The revalued assets and liabilities are shown in the balance sheet at original figures.
PARTS It is divided into no parts. It is divided into two parts.
TRANSFER OF BALANCE The Balance i.e. Profit/Loss is transferred to The account of old partners in old ratio. The Balance i.e. Profit/ Loss of first part is transferred to accounts of old partners in old ratio. The balance of second part is transferred to all partners in new ratio.

12 ACCOUNTANCY, PARTNERSHIP ACCOUNTS Tags:DIFFERENCE BETWEEN REVALUATION ACCOUNT AND MEMORANDUM REVALUATION ACCOUNT, MEMORANDUM REVALUATION ACCOUNT, MEMORANDUM REVALUATION ACCOUNT FORMAT

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Comments (2) on “MEMORANDUM REVALUATION ACCOUNT FORMAT”

  1. Debojyoti dutta says:
    November 14, 2019 at 4:04 pm

    Helpful

    Reply
    1. commerceiets says:
      November 17, 2019 at 12:18 pm

      Thank you!

      Reply

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