Grey, Brown and Black are partners in a firm sharing profits and losses in the ratio 2: 3: 1. They decided to share their future profits and losses equally with effect from 1 st April, 2019. On this date, their Balance sheet showed furniture of 1,50,000. However, the same was overvalued by 50%. What will be the revised value of the furniture and how will you record it at the time of change in the profit-sharing ratio among the partners?

.              Revaluation A/c
Dr.                                                   Cr.
Particulars Amount particulars  Amount 
To furniture A/c 50,000 by loss transferred to partner capital A/c  
    Grey 16666  
    Balck8334 50,000
  50,000   50,000
New amount will be 1,00,000 that will be shown in the balance sheet 
Let original value of furniture is rs x
X + 50% of x = 1,50,000
150x/100 = 1,50,000
x = (150000 × 100)/150
x = 1,00,000
Furniture is overvalued by rs 50,000i.e. (150000 - 100000)

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