Which of the following statement is true?

Revaluation A/c is prepared for the revaluation of assets and liabilities on the admission of a partner in the partnership firm.

The correct answer is option 1- Revaluation A/c is prepared for the revaluation of assets and liabilities on the admission of a partner in the partnership firm.

* Revaluation A/c is prepared for the revaluation of assets and liabilities on the admission of a partner in the partnership firm. THIS IS TRUE. At the time of admission of a new partner, it is always desirable to ascertain whether the assets of the firm are shown in books at their current values. In case the assets are overstated or understated, these are revalued. Similarly, a reassessment of the liabilities is also done so that these are brought in the books at their correct values. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. For this purpose the firm has to prepare the Revaluation Account. 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.

* The new partner is liable for the past losses of the partnership firm. THIS IS FALSE. The new partner is not liable for past losses. They are distributed among the old partners in their old ratio. The new partner will have share in future profits and losses.

* Goodwill is considered as intangible asset under AS - 28. THIS IS FALSE. Goodwill is an intangible asset under AS-26. Intangible asset should be recognised by fulfilling the criteria as recognised under AS 26.

* When a partner is admitted, there is dissolution of partnership firm. THIS IS FALSE. When a partner is admitted in the partnership firm then there is reconstitution of the firm or dissolution of partnership only. Dissolution of partnership firm leads to closure of the firm but in case of reconstitution the firm, the firm continues its business with new terms as agreed between old partners and new partner.