Land & Building was to be increased to ₹3,00,000. Revaluation A/c wil…

Amar & Akbar were partners in a firm sharing P & L in ratio 3 : 2. Their Balance Sheet as at March 31, 2023 was as under:

Liabilities	Amount (₹)	Assets	Amount (₹)
Creditor	50,000	Land & Building	2,50,000
Bank Loan	2,00,000	Plant & Machinery	1,80,000
Amar Capital	2,80,000	Goodwill	1,00,000
Akbar Capital	1,20,000	Stock	60,000
		Debtor	40,000
		Bank	20,000
	6,50,000		6,50,000

They admitted Anthony as a new partner for 1/5 share which he acquired equally from Amar and Akbar.

Based on above information, answer questions.

Land & Building was to be increased to ₹3,00,000. Revaluation A/c will be _________ by _________ .

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Credited by ₹50,000

Land & Building: book value ₹2,50,000, new value ₹3,00,000

Increase = ₹3,00,000 − ₹2,50,000 = ₹50,000 (a gain)

Entry: Land & Building A/c Dr ₹50,000 To Revaluation A/c ₹50,000, so the Revaluation Account is credited with the increase only, not with the full value.

NCERT (2026-27 edition):
Revaluation of Assets and Reassessment of Liabilities – “… The gain or loss on revaluation of each asset and liability is transferred to this account and finally its balance is transferred to the capital accounts of the old partners in their old profit sharing ratio. In other words, the revaluation account is credited with increase in the value of each asset and decrease in its liabilities because it is a gain and is debited with decrease in the value of assets and increase in its liabilities is debited to revaluation account because it is a loss.”