BDC 201: Financial Accounting 3

Assignment (4)

Full Name:

Student Number:

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[Total: 20%]
Question

Archer and Tanker have always shared profits in a 2:1 ratio respectively. They admit Read as a
partner as on 1 December 2010, who will contribute £ 20,000,000 cash as capital. The partners
decided to revalue their assets as on 30 November 2010.

Balance Sheet as at 30 November 2010

£ ’000 £ ’000
Non Current Assets
Equipment 90,000
Machinery 44,000
134,000

Current Assets
Inventory 12,000
Cash 4,000 16,000
150,000

Capitals
Archer 90,000
Tanker 60,000
150,000

Assets are to be revalued as follows:-

£ ’000
Equipment 160,000
Machinery 40,000
Inventory 6,000

Required:

a) Revaluation Account

b) New balance sheet after the admission of Read on 1 December 2010

***Please show detailed workings***