Question

Assertion (A): Gain (Profit) or Loss on revaluation of assets and reassessment of liabilities is transferred to the Capital Accounts of all the partners, including that of the Deceased Partner.

Reason (R): Gain (profit) or loss due to change in values of assets and liabilities is for the period before the death of the partner.

In the context of the above two statements, which option is correct?

Options

• Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is correct, but Reason (R) is not correct.

• Assertion (A) is not correct, but Reason (R) is correct.

Answer 1

Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

Explanation:

Both statements are correct, and R correctly explains that the revaluation gain or loss relates to the period up to the partner’s death, so the deceased partner is entitled to his/her share and that share is credited or debited to the deceased partner’s Capital Account (and to other partners in the old profit‑sharing ratio).