Question

State the ratio in which the partners share the gain or loss on revaluation of assets and liabilities.

Answer 1

Revaluation of all assets and reassessment of all liabilities takes place at the time of admission of a partner. This is done to ascertain that the assets and liabilities in the books are shown at their current values. Any profit or loss that arises due to this revaluation is transferred to the old partner's capital accounts in their old profit sharing ratio.