What is the purpose of revaluing assets and reassessing liabilities during the admission of a new partner?

To reflect the fair market value of the firm's assets and liabilities

During the admission of a new partner to a partnership firm, the purpose of revaluing assets and reassessing liabilities is to reflect the fair market value of the firm's assets and liabilities at the time of the new partner's entry. This ensures that the firm's financial statements accurately represent the value of its resources and obligations. Revaluing assets involves assessing the current market value of the firm's assets, such as land, buildings, machinery, inventory, etc. It takes into account factors such as depreciation, appreciation, changes in market conditions, and any other relevant considerations. The recorded values of the assets on the firm's books are adjusted to reflect their updated values. Reassessing liabilities involves reviewing the firm's outstanding debts, loans, and other obligations to determine their current value and ensure accurate reporting in the financial statements. By revaluing assets and reassessing liabilities, the partnership firm provides a more realistic representation of its financial position and ensures that the new partner's capital contribution and profit sharing are based on the fair value of the firm's assets and obligations.