Practicing Success
There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below. Assertion (A): At the time of reconstitution of the firm, assets are revalued, and liabilities are reassessed. |
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). Both Assertion (A) and Reason (R) are true, and Reason (R) is not the correct explanation of Assertion (A). Assertion (A) is False, but Reason (R) is True. Assertion (A) is true, but Reason (R) is False. |
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). |
At the time of retirement or death of a partner there may be some assets which may not have been shown at their current values. Similarly, there may be certain liabilities which have been shown at a value different from the obligation to be met by the firm. Not only that, but there may also be some unrecorded assets and liabilities which need to be brought into books. As learnt in case of admission of a partner, a Revaluation Account is prepared in order to ascertain net gain (loss) on revaluation of assets and/or liabilities and bringing unrecorded items into firm’s books and the same is transferred to the capital account of all partners including retiring/deceased partners in their old profit-sharing ratio. |