Question

Short answer type question:
State the ratio in which the partners share gain or loss from revaluation. of assets and liabilities.

Answer 1

Revaluation account is prepared at the time of reconstruction of firm, all assets are revalued and all liabilities are reassessed. Increase in the value of asset or decrease in the value of liabilities are credited to revaluation account and Decrease in the value of asset and increase in the value of liability is debited to revaluation account. The difference betweeen the two sides is either profit or loss which is distributed among old partners in old profit sharing ratio.