Question

A and B are partners sharing profits in the ratio of 3 : 2. On admission of C for 1/5th share, Land is appreciated by 10% (Book Value Rs. 80,000),Building is decreased by 20% (Rs. 2,00,000), Unrecorded Debtors of Rs. 1,250 are bought in the books and Creditors of Rs. 2,750 need not be paid. The Gain (profit) /loss on revaluation will be: *

Profit Rs. 28,000

Profit Rs. 40,000

Loss Rs. 40,000

Loss Rs. 28,000

what is the correct option.?

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Answer 1

Answer:

Last option Loss of rs 28,000

Explanation:

Appreciation of land value = rs.80,000*10% = Rs 8,000

Depreciation on building = 200,000*20% = (Rs 40,000)

Increase in value of Debtors = Rs 1250

Decrease in creditors = Rs 2,750

Profit(Loss) on revaluation = Rs 8000 - 40,000 + 1250 + 2750 = (Rs 28,000)