Principles of Accounting: Example revaluation of partnership assets

• As already pointed out in another post, sometimes it is necessary for a partnership to revalue its assets
• We have already looked at the entries necessary to record these changes in value
• Now we will look at an example of how these entries are recorded in the books of the partnership

Example Question

Below is the Statement of Financial Position for Pedzisai, Rateyiwa and Sauramba as at 31 December 20×8

The above partners have always shared profits and losses in the ratio: Pedzisai 4: Rateyiwa 2: Sauramba 1. From 1 January the assets were to be revalued as the profit sharing ratios are to be altered soon.

The following assets are to be revalued to the figures shown:

• Buildings $106 000;
• Motor vehicles $13 000;
• Inventory $4 894;
• Office fittings $1 450

Required:

1. You are required to show all the ledger accounts necessary to record the revaluation.
2. Draw up a balance sheet as at 1 January 20X9.

Solution

1. The Revaluation Entries

2. The Statement of Financial Position as at 1 January 20×9

To access more topics go to the Principles of Accounts Notes.