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Pls reply urgent...
if book value of machinery is 10 lakhs on 31st March 2010 and market value on the same date is 11 lakhs and company shows machinery at 11 lakhs. which value principle is being followed? a) Historical cost b) present value c) Realisable value d) current cost pls reply as soon as possible.
Replies (11)
This question is not correct.
what do u mean by the term market value of the machine
(a) sale value of old machine or
(b) purchase price of a similar new machine.
In Normal situation we don't prefer this re-valuation method I.e Realisable Value
If an concern takes such revaluation of assets he will have to create h revaluation reserve acount
Agree with jaykumar ji
Guys ! It is just a CPT Question on the valuation principles . 
Don't go to the Accounting Standards. Let him clear the CPT first.
Thats wrong when u do such treatment only when there is a threat to co. Going coancern assumption...then only assets are reevalued at realisable valu
you have adopted the principle of Relisable Value.
If you sold the machine then show realisable value. Or otherwise show only historical value
Only historical value to be followed, otherwise sufficient case of reveluation needed for the assets. the value must have a evidence for resale or value of the same machine in the market. that time only the revaluation reserve must be created, but the expenses will not be debite in the profit and loss account. it is not a matter cpt or final or b.com, accounting treatment is same for all.
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