At the time of retirement of a partner, profit on revaluation will be credited to:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Capital Accounts of all partners in the old profit sharing ratio.
For distribution of profit or loss on revaluation:
Revaluation A/c Dr.
To All Partners’ Capital A/c’s (Individually)
(Profit on revaluation transferred to partner’s capital)
Profit will increase the capital balance of the partners so there capital account is credited. It is distributed between all partners including retiring partner in their old ratio as it belongs to them for earlier transactions.