What is the meaning of Undervalued and Overvalued?????

Undervalued: When an asset or liability is undervalued it means that the value of the asset or liability appearing in the old balance sheet (i.e. before reconstitution) is less than its actual value (correct value). Hence, it should now be accounted for.

If an asset is undervalued - Credit Revaluation A/c with the difference amount (between actual value and balance sheet value)
‚ÄčIf a liability is undervalued - Debit Revaluation A/c with the difference amount (between actual value and balance sheet value)


Overvalued: When an asset or liability is overvalued it means that the value of the asset or liability appearing in the old balance sheet (i.e. before reconstitution) is more than its actual value (correct value). Hence, it should now be accounted for.

If an asset is overvalued - Debit Revaluation A/c with the difference amount (between actual value and balance sheet value)
‚ÄčIf a liability is overvalued - Credit Revaluation A/c with the difference amount (between actual value and balance sheet value)

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