What is the treatment of unrecorded assets and liabilities in the Rev…

The correct answer is option 3- Unrecorded assets are credited and unrecorded liabilities are debited to the Revaluation Account.

During the admission of a new partner, the Revaluation Account is used to bring unrecorded assets and liabilities into the books of the firm. Unrecorded assets are credited to the Revaluation Account, indicating their addition to the firm's books, while unrecorded liabilities are debited to the Revaluation Account, reflecting their inclusion. Journal entry for this-

 

For an unrecorded asset-
Asset A/c
        To Revaluation A/c

For an unrecorded liability-
Revaluation A/c
          To Liability A/c