The profit or loss on revaluation of assets and liabilities are distributed in ______.
Answer & explanation
Correct answer: option 2
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.