Unit 5 question help please

westendladwestendlad Feels At HomeRegistered Posts: 30
I'm struggling with a question ref level 5 - I missed the class this week and took away the papers to try and do them at home.

Basically, it involves a revaluation made to propery that needs to be shared out between the partnership of 3 people.

The land and buildings had an NBV of 220,000 which is revalued to 420,000

How do I show this in the Capital accounts ? The capital accounts of the 3 partners starts at 70,000, 50,000 and 30,000

Much appreciated.

Comments

  • EsmeEsme Experienced Mentor Registered Posts: 711
    I'm preparing for my Unit 5 exam and have never come accross anything like this?! You've worried me now!

    What chapter was this referring to? Was it a question your tutor set or is it from a past exam/simulation?
  • westendladwestendlad Feels At Home Registered Posts: 30
    its a homework paper, it might be from an old exam but if it is I can't find it. Maybe I'm looking at the hardest piece of homework here, but as I said, I missed the lesson this week and am trying to pick up the basics via the Kaplan publication.
  • vishavisha Well-Known Registered Posts: 218
    Think of the balance sheet.

    The balance sheet is split into two parts

    Net Assets = Debit balance

    Capital (Equity) = Credit balance

    Both parts of BS must balance (must be equal to each other)

    If the Land and Buildings have been re-valued by an increase of £200,000 then the assets has increased.

    You must balance the Balance sheet. You will need to increase the Capital. (Re-valuation account) for each partner according to their share of the Prtnership agreement. (presumably 70:50:30)
  • westendladwestendlad Feels At Home Registered Posts: 30
    thanks for that mate. I think I may have picked the most difficult exercise of the 4 here.

    I'll have a look at it again, but the basic principle as explained in Kaplan pages 245 and 246 show a new partner putting 30,000 into the goodwill account. This 30,000 is credited to 2 partners at 15,000 each but then the bank is credited with 60,000

    I don't see where this 60,000 is coming from ? Any further help would be greatly appreciated and then I will try to do the other exercises. Many thanks.
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Well didnt the other partner introduce 30000? making 60k put in to the account? this is because there equal partners ?
  • lauradlaurad Feels At Home Registered Posts: 49
    never seen anything like that! i am now worried too
  • PAMDILLPAMDILL Experienced Mentor Registered Posts: 715
    I have seen the goodwill questions but not asset revaluation questions.

    I am worried too, going to haul out the books tonight to read up on revaluations.
  • MikeyabosbhtMikeyabosbht Settling In Nicely Registered Posts: 19
    This is not part of the syllabus. Don't worry.

    I studied this in A2 Accounting. You open up a revaluation "T" account rather than a goodwill account. And credit the partners capital accounts with any increases in asset valuations, just like goodwill and debit the partners capital accounts with any devalauations.

    Revaluation of tangible fixed assets is not examinable under AAT.
  • EsmeEsme Experienced Mentor Registered Posts: 711
    Phew!!
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