Reconstitution of Partnership Firm: Retirement and Death
Question:
The profit or loss on revaluation of assets and liabilities are distributed in ______.
Options:
New ratio
Old ratio
Gaining ratio
Sacrificing ratio
Correct Answer:
Old ratio
Explanation:
The correct answer is Option (2) → Old ratio
At the time of revaluation of assets and liabilities, the Revaluation Account (Profit or Loss) relates to the period before the change in partnership (such as admission, retirement, or death).
Therefore, any profit or loss on revaluation belongs to the old partners who have been responsible for that period.
