Question

Why is revaluation of assets on reconstitution of partnership necessary?

Answer 1

At the time of reconstitution of partnership, it is necessary to revalue the assets to get its true value. The value of assets may have increased or decreased over time and their figures in the old balance sheet may be either undervalued or overvalued, it can also happen that some of the assets are left unrecorded. Thus, revaluation account is prepared for keeping the record of the increase and decrease of the market value of assets and liabilities.