Question : Assertion (A): Hari and Mohan are equal partners. They admit Kunal as a partner for 1/4th share. The value of assets was increased by Rs 1,00,000 and an unrecorded liability of Rs 40,000 was brought into books, The gain (profit) of Rs 60,000 will be credited in the capital accounts of Hari and Nimrat equally.
Reason (R): Gain (profit) or loss on revaluation of assets and reassessment of liabilities is credited or debited to the Capital Accounts of old partners in their old profit-sharing ratio.
In the context of the above two statements, which of the following is correct?
Option 1: Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation Assertion (A).
Option 3: Assertion (A) is correct but the Reason (R) is not correct.
Option 4: Both Assertion (A) and Reason (R) are not correct.
Correct Answer: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation Assertion (A).
Solution :
Answer =
Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Both Assertion and Reason are correct and Reason is the correct explanation of assertion.
Gain and lose on revaluation are distributed in old partners in their old profit-sharing ratio.
Hence, the correct option is 2.
