The balance sheet has a workmen compensation reserve of 12000
additional information:
liability for workmen compensation to the extent of 6000 is to be created
why isn't this liability that has been created recorded in the revaluation account,but only shown as liability in balance sheet?
(i came across the question from T.S grewal -pg 5.31-illustration 30)
Dear Student,
Revaluation A/c only holds changes in values of assets and liabilities and not its actual value;
And this is the reason why liability on account of workmen Compensation is not shown in revaluation A/c but only in liabilities side of the balance sheet;
But the change in value of Workmen compensation fund i.e difference of Rs 6,000 (12,000 Less 6,000) would be shown in revaluation A/c;
Regards,
Revaluation A/c only holds changes in values of assets and liabilities and not its actual value;
And this is the reason why liability on account of workmen Compensation is not shown in revaluation A/c but only in liabilities side of the balance sheet;
But the change in value of Workmen compensation fund i.e difference of Rs 6,000 (12,000 Less 6,000) would be shown in revaluation A/c;
Regards,