Dinesh, Ramesh and Suresh are partners in a firm sharing profits and losses in the ratio of 3:3:2. From April 1, 2025, they decided to share profits and losses equally. The value of fixed assets on March 31, 2025, in the balance sheet was Rs. 2,80,000 and it was revalued at Rs. 3,31,000 on April 1, 2025. What journal entry will be passed in the books of the firm related to fixed Assets?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Fixed Assets A/c Dr. 51,000, To Revaluation A/c 51,000
A change in the profit sharing ratio is a reconstitution of the firm, so assets are revalued through the Revaluation Account, as on admission. The fixed assets have gone up in value.
Book value on March 31, 2025 = Rs. 2,80,000
Revalued figure on April 1, 2025 = Rs. 3,31,000
Increase = Rs. 3,31,000 − Rs. 2,80,000 = Rs. 51,000
Fixed Assets A/c Dr. 51,000
To Revaluation A/c 51,000
Fixed Assets are debited because the asset increases. The increase is a gain, so Revaluation A/c is credited; the net gain will later go to Dinesh, Ramesh and Suresh in their old ratio of 3 : 3 : 2. Only the increase is recorded, not the full revalued figure, since the assets already stand in the books at Rs. 2,80,000.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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