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Question
If, at the time of admission, the revaluation A/c shows a profit, it should be credited to ______.
Options
Old partners’ capital accounts in the old profit-sharing ratio.
All partners’ capital accounts in the new profit-sharing ratio.
Old partners’ capital accounts in the new profit-sharing ratio.
Old partners’ capital accounts in the sacrificing ratio.
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Solution
If, at the time of admission, the revaluation A/c shows a profit, it should be credited to Old partners’ capital accounts in the old profit-sharing ratio.
Explanation:
The Revaluation Account is prepared to adjust the value of assets and liabilities at the time of a partner’s admission. Any profit or loss arising from this revaluation relates to the period before the new partner was admitted. Therefore, these profits or losses belong exclusively to the original partners and must be distributed among them in their old profit-sharing ratio. The new partner has no claim on these past adjustments.
