Prompt Detail:
Here's a tabular comparison of Realisation Account and Revaluation Account:
| Aspect | Realisation Account | Revaluation Account |
|---|---|---|
| Purpose | To record the sale of assets, payment of liabilities, and distribution of surplus or deficit when a partnership is dissolved. | To revalue assets and liabilities to reflect their fair market values or book values when there's a change in the partnership's constitution. |
| Timing | Prepared during the dissolution of a partnership. | Prepared when there is a change in the partnership's constitution. |
| Components | Contains entries related to the sale of assets, settlement of liabilities, and distribution of surplus or deficit. | Contains entries for revaluation of assets and liabilities. |
| Purpose of Revaluation | Does not involve revaluing assets and liabilities; focuses on actual sale and settlement. | Involves adjusting capital accounts based on changes in asset and liability values. |
| Recording Gains and Losses | Records gains or losses realized during dissolution, which may arise from asset sales or liability settlements. | Records revaluation gains or losses due to changes in asset and liability values and their impact on capital accounts. |
| Entries in Capital Accounts | Does not directly affect capital accounts; the final Realisation Account balance is transferred to partners' capital accounts. | Directly affects capital accounts as revaluation gains/losses impact partners' capital accounts. |
Please note that both accounts are used in different contexts, and their purpose and impact on financial statements differ accordingly.
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