Revaluation of assets by the partnership firm is necessary because the......... value of assets is different from the current value.

Book

It is always desirable to ascertain whether the assets of the firm are shown in books at their current values. In case the assets are overstated or understated, these are revalued. Similarly, a reassessment of the liabilities is also done so that these are brought in the books at their correct values. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. For this purpose the firm has to prepare the Revaluation Account. The gain or loss on revaluation of each asset and liability is transferred to this account and finally its balance is transferred to the capital accounts of the old partners in their old profit sharing ratio. Some assets fluctuate over time due to changes in market value. When an asset increases in value, a revaluation is necessary. If the asset were to decrease in value, then an impairment would be necessary.