Question

State whether Revaluation Account is debited or credited to record the decrease in the value of Plant and machinery.

Answer 1

At the time of admission of a new partner, all assets are revalued to ascertain that they are recorded in the books at their current values. Any gain or loss from such revaluation is transferred to the revaluation account. A decrease in the value of plant and machinery is debited to the revaluation since it a loss for the firm.