Why is it necessary to revalue assets and liabilities at the time of death of a partner?

At the time of retirement or death of a partner assets are revalued and liabilities are reassessed so that the profit or loss arising on account of such revaluation up to the date of retirement or death of a partner may be ascertained and adjusted in all partners’ capital accounts in their old profit-sharing ratio.

Why is it necessary to revalue the assets and liabilities of a firm on its reconstitution explain?

why is it necessary to revalue the assets and liabilities on the reconstitution of the firm? This is done because the value of assets and liabilities may have increased or decreased and consequently their corresponding figures in the old balance sheet may either be understated or overstated.

What is the need for the revaluation of assets and liabilities on the admission of a new partner?

At the time of admission of a new partner, we need to revalue the existing assets and liabilities and thus, prepare the revaluation account. The value of assets may be different from its book value because, with time, the value of some assets increases while that of some decreases.

Why are assets and liabilities revalued at the time of retirement of a partner prepare a revaluation account with the help of an example by taking imaginary figures?

Retirement of a partner leads to reconstitution of the firm. Henceforth, Assets and liabilities are revalued to ascertain the true profit or loss which is to be distributed among old partners in old ratio at the time of retirement.

Why assets and liabilities are revalued at the time of reconstruction of partnership firm?

At the time of reconstitusion of the firm, assets and liabilities of the firm are revalued. The objective acheived in this process is that the net benefit of increase (or decrease) in the value of assets and liabilities due to the efforts of the existing partners is shared by then only.

Why are assets and liabilities revalued in case of retirement recorded in the books of account?

At the time of retirement or death of a partner, there may be some assets and liabilities which are not recorded in books at their current values. A Revaluation Account is prepared in order to ascertain net gain or loss on revaluation of assets and liabilities and bringing unrecorded items into books.

Why is revaluation necessary?

The purpose of a revaluation is to bring into the books the fair market value of fixed assets. This may be helpful in order to decide whether to invest in another business. If a company wants to sell one of its assets, it is revalued in preparation for sales negotiations.

Why assets are revalued and liabilities are reassessed at the time of admission?

At the time of admission of a new partner, the assets are re-valued and liabilities are reassessed. The assets are re-valued and liabilities are reassessed so that: The assets are overstated or understated are revalued. The liabilities are brought in the books at their correct values.

Why is the need for revaluation of assets and liabilities?

The need for revaluation for assets and liabilities arises because the value of assets and liabilities belongs to the period prior to change in the profit sharing ratio and the assets or liabilities before revaluation should be shared between the partners in their old ratio.

Why assets and liabilities are revalued?

Revaluation of assets and liabilities in partnership is done at the time of change in the profit sharing ratio among the partners. Assets and liabilities are revalued because the realisable or actual value of assets and liabilities may be different from the figures shown in the Balance Sheet.

Why there is need for revaluation of assets and liabilities?

What is the purpose of revaluation account?