Revaluation Reserve A/c

As per AS-10,

Revaluation reserve A/c is to be made when ever we revalue our assets.

and additonal dep is to be charged from this resrve.

 

i want to know why we do this only in case of Companies but not in firm or proprieter ship concern.?

Replies (2)

AS 10 is NOT mandatory for proprietory concerns and partnership firms. Further, in case of prop firm and partnership firm, any profit or loss is directly credited or debited to Capital Alc. at the end of the year. Hence ultimately all earnings (including revaluation of assets) are directly credited to Capital A/c. This is NOT the case with companies. The profits and free reserves have to be kept seperate from other reserves. Thus because the profit on revaluation is ultimately going to be credited to Capital A/c in case of proprietorship and partnership, it is NOT credited to Revaluation Reserve and unnecessary mess up the accounts. Suppose even a Revaluation Reserve A/c. is created, it will also be ultimately credited to Capital A/c. as there is no compulsion to keep Revaluation Reserve seperate like in case of Co.   

I agree with Mr. Sandeep; There is no provision in Partnership Act that the accounts of a partnership firm are to be maintained in accordance to AS further there is no compulsion for audit of accounts.

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