"Bank loan is paid off". How will you treat this adjustment? Will it appear in Revaluation a/c? If not, why?
Dear Student,
Here, asset (bank) and bank loan (liability), both are affected simultaneously by the same amount. Therefore, it should not be recorded in the Revaluation A/c.
When bank loan is paid-off, Bank A/c is credited (decrease in asset) and Bank Loan A/c will be debited (decrease in liability). Therefore, now bank loan will not appear in New Balance Sheet.
Regards
Here, asset (bank) and bank loan (liability), both are affected simultaneously by the same amount. Therefore, it should not be recorded in the Revaluation A/c.
When bank loan is paid-off, Bank A/c is credited (decrease in asset) and Bank Loan A/c will be debited (decrease in liability). Therefore, now bank loan will not appear in New Balance Sheet.
Regards