Read the following passage and answer the following question.

A, B & C are partners sharing profits and losses in the ratio of 2:2:1. B decided to retire on 31st March 2021. On the date of retirement, some of the assets and liabilities appeared in the books as follows-

Creditors- ₹70,000
Building- ₹1,00,000
Machinery- ₹40,000
Stock of raw material- ₹20,000
Stock of finished goods- ₹30,000
Debtors- ₹20,000

If revaluation profit is ₹50,000 then in what ratio it will be distributed between partners?

2:2:1

The correct answer is option 2- 2:2:1

Revaluation profit is distributed between partners in their old ratio because it belongs to old partners. Here, the old ratio is 2:2:1, so revaluation profit of ₹50,000 is distributed between A, B & C in 2:2:1.