BDC 201 Financial Accounting 3

Question (20 marks)

Archer and Tim have always shared profits in a 2:1 ratio respectively.
They admit Ross as a partner as on 1 March 2005 who will contribute
SGD 20,000,000 cash as capital. The partners decided to revalue their
assets as on 28 February 2005.

Balance Sheet as at 28 February 2005

SGD SGD
‘000 ‘000
Non Current Assets
Furniture and fittings 90,000
Machinery 44,000
134,000

Current Assets
Account receivables 8,000
Inventory 12,000
Cash 4,000 24,000
158,000

Capital
Archer 98,000
Tim 60,000
158,000

Assets are revalued as follows:-

SGD ‘000
Furniture and fittings 160,000
Machinery 40,000
Inventory 6,000

Required:

a) Revaluation account

b) New balance sheet after the admission of Ross on 1 March 2005