Memorandum revalaution
This query is : Resolved
02 February 2016
Whenever the word 'Memorandum' is used before any account, it means that account is not supported by double entry book keeping system.
Memorandum Revaluation Account is prepared when at the time of admission/retirement the partnership firm does not want to change the values of assets and liabilities in the balance but wants to give its effect through partners' capital accounts.
This account has two parts and the first part is similar to the Revaluation A/c Profit (loss) calculated is credited (debited) to old partners in their old profit sharing ratio. In the second part the entries made in the first part are reversed and Profit (loss) of first part turns into loss (profit) ( in the second part. This loss (profit) is debited (credited) to all partners including new partner in their new profit sharing ratio. Remember that no entries are made in the Assets/Liabilities accounts or Capital accounts. Only one single adjustment will be passed. The memorandum Revaluation A/c is just prepared to know the amounts by which the adjustment entry is to be passed
Memorandum Revaluation Account is prepared when at the time of admission/retirement the partnership firm does not want to change the values of assets and liabilities in the balance but wants to give its effect through partners' capital accounts.
This account has two parts and the first part is similar to the Revaluation A/c Profit (loss) calculated is credited (debited) to old partners in their old profit sharing ratio. In the second part the entries made in the first part are reversed and Profit (loss) of first part turns into loss (profit) ( in the second part. This loss (profit) is debited (credited) to all partners including new partner in their new profit sharing ratio. Remember that no entries are made in the Assets/Liabilities accounts or Capital accounts. Only one single adjustment will be passed. The memorandum Revaluation A/c is just prepared to know the amounts by which the adjustment entry is to be passed
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