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It is necessary to revalue assets and reassess liabilities at the time of admission of new partners as if assets and liabilities are overstated or understated in the books then its benefits or loss should not affect the near partner.
To identify all the rights and obligations of the old company and determine the value to be paid from the new partner to form a new company
To show the fair market value of assets which have considerably appreciated since their purchase such as land and buildings.
fitsrt thanks It is necessary to revalue assets and reassess liabilities at the time of admission of new partners as if assets and liabilities are overstated or understated he actually knows the the health of a busniess
because change in the value of assets and liabilities as on the date of admission.
A proper and fair valuation of assets is required at the time of admission of new partner with a view that under estimates and over estimates should effects partnership.
ِAs per principle of transparency and as per principle of historical valueAssets already were recorded with historical value which will affect on company value and change on the future so it is necessary to revalue assets and liabilities
Revaluation of assets and liabilities is necessary because with the passage of time the value of some assets might have increased or decreased,the same in case of liablilities.Hence acutal values of assets and liabilities may be different from the values stated in balance sheet. It is therefore desirable to revalue the assets and liabilities on admission of new partner so that the new partner is neither put to an advantage or disadvantage because of change in value of assets and liabilities of the firm.
Accounting books has historical value and when time change it will change in value
So it will be more real to revalue assets at time of admission
It is necessary to revalue assets and reassess liabilities at the time of admission of new partner know the exact worth of the assets and the exact value of the liability so that the partners will be clear about the health of the organisation. Moreover they also can arrive at the actual contribution required by the new partner based on the recent assessment.
The necessity to revalue assets and reassess liabilities at the time of admission of new partner to again reinstate the justice to the existing partners and treat the new entrant at par with them for sharing in the ratio already agreed upon by giving due weight-age.
