The journal entries recorded for revaluation of assets and reassessment of liabilities are given here, find the correct :(A) For increase in the value of an assetAsset A/c Dr.To Revaluation A/c(B) For reduction in the value of an assetRevaluation A/c Dr.Asset A/c(C) For increase in the amount of a liabilityLiability A/c Dr.To Revaluation A/c(D) For recording in the amount of a unrecorded liabilityRevaluation A/c Dr.To Liability A/cChoose the correct answer from the options given below:
- A(A), (B), (C), (D)
- B(A), (B) and (D) only
- C(B), (A) and (C) only
- D(C), (B) and (D) only
Solution & Step-by-step Explanation
Let's evaluate the standard journal entries for revaluation:(A) is Correct: An increase in asset value is a gain, so Asset A/c is debited and Revaluation A/c is credited.(B) is Correct: A reduction in asset value is a loss, so Revaluation A/c is debited and Asset A/c is credited.(C) is Incorrect: An increase in liability is a loss. The correct entry is:
The option incorrectly reverses this.(D) is Correct: Recording an unrecorded liability is a loss, so Revaluation A/c is debited and Liability A/c is credited.Thus, statements (A), (B), and (D) only are correct.
The option incorrectly reverses this.(D) is Correct: Recording an unrecorded liability is a loss, so Revaluation A/c is debited and Liability A/c is credited.Thus, statements (A), (B), and (D) only are correct.