Question

If C is going to be admitted to the partnership of A and B, why is it first necessary to determine the
current fair market value of the assets of the partnership of A and B?

Answer 1

Answer:

please follow me

Explanation:

please please this is my answer

Answer 2

It is necessary to determine the current fair market value of the assets of the partnership of A and B, because of the following reasons:

Explanation:

• At the time of admission of a new partner, it turns out to be very necessary to revalue the assets and liabilities of a cooperation firm for establishing its true and fair values.  

• This is done because the worth of assets and liabilities may have increased or decreased and subsequently their consequent figures in the old balance sheet may either be overstated or understated.  

• Furthermore, it may also be likely that some of the assets and liabilities have been unrecorded.  

• So, in order to register the increase and decrease in the market value of the assets and liabilities, Revaluation Account is drafted and any profits or losses linked with this increase or decrease are allocated between the old partners of the firm.