Question

State any two reasons for the preparation of revaluation account at the time ofadmission of a partner

Answer 1

Revaluation account is a nominalaccount prepared for the purpose of distributing and transferring the profit or loss arising out of increase or decrease in the book value of assets and/ or liabilities of the partnership firm at the time of Change in profit sharing ratio,admission of a partner, retirement of apartner ..

Answer 2

The two reasons for which revaluation account is prepared at the time of admission of a new partner are:

Revaluation account is necessary to be prepared as it records any change in the assets and liabilities of a company, which is required for the new partner to know.

It is because a new partner will not be ready to suffer the loss during the period before his admission.

Also , the old partners will not be ready to share the profit during the period before his admission.