There is no difference between motor car to be reduced by 10% and motor car to be reduced
to 10% at the time of change in profit-sharing ratio. Is this true or false? Also, give reason
for your answer.
Dear Student
Above given statement in false.
There is difference between motor car to be reduced by 10% and motor car to be reduced to 10%.
Reason: motor car reduced by 10% means now value of machine is 90%.
Motor car reduced to 10% means now value of machines is 10%
Let's take an example, machines shown is balancesheet for Rs100000
Above given statement in false.
There is difference between motor car to be reduced by 10% and motor car to be reduced to 10%.
Reason: motor car reduced by 10% means now value of machine is 90%.
Motor car reduced to 10% means now value of machines is 10%
Let's take an example, machines shown is balancesheet for Rs100000
- Case 1 : it is reduced by 10%. It means value of machinery decrease by 10000 and 10000 to be recorded in debit side of revaluation A/c. Remaining 90,000 to be recorded in Balancesheet.
- Case 2: it is reduced to 10%. It mans value of machinery decrease by 90000 and 90000 to be recorded in debit side of revaluation A/c. Remaining 10000 recorded in Balancesheet.