Revaluation of assets by sole proprietor

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Guest

Guest (Querist)

04 November 2012 Can sole proprietor revalue assets of his organisation?

What would be the treatment in balance sheet?

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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04 November 2012 Revaluation can be done by a sole proprietor also. But the question is what is the purpose of revaluation? Assset dr to revaluation reserve

Guest

Guest (Querist)

04 November 2012 The sole proprietor wanted a loan from bank. The TOL/TNW is high. so the bank wont give loan. to reduce the ratio the sole proprietor is considering upward revaluation to lower the ratio

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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04 November 2012 If this is the reason for revaluation then I think revaluation will not serve your purpose

CA GAGAN KHARBANDA

CA GAGAN KHARBANDA (Expert)
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05 November 2012 Banks not provide loan on the basis of book value of assets .. actual market value of assets also to be considered while computing actual wealth of the business.

Guest

Guest (Querist)

05 November 2012 The banks were saying that organisation did not have own capital . so he was suggesting to revalue the assets and increase the capital.

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
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05 November 2012 U cannot increase the networth by creating revalauation reserve. Revaluation reserve wud b excluded while calculating the networth. So I think bank officials are misguiding u