A and B are partners in a firm sharing profits in the ratio 2 : 1. C is admitted into the firm with 1/4 share in profits. He will bring in ₹30,000 as capital and capitals of A and B are to be adjusted in the profit sharing ratio. The balance sheet of A and B as on March 31, 2017 (before C's admission ) was as under :

Balance Sheet of A and B as at March 31,2017

Other terms of agreement are as under :

1. C will bring in ₹12,000 as his share of goodwill.

2. Building was valued at ₹45,000 and Machinery at ₹23,000

3. A provision for bad debts is to be created @6% in debtors.

4. The capital accounts A and B are to be adjusted by opening current accounts.

Calculate the profits or loss on Revaluation of Assets and liabilities.

₹2,520 (profit)

The correct answer is option 3- ₹2,520 (profit).

Revaluation Account