Question : R and D are partners as per provisions of Indian Partnership Act 1932. On admission of a new partner M for 1/5 share, a revaluation account is prepared. M claims to have eqal share in revaluation profits. Choose the correct accounting treatment
Option 1:
M's share of revaluation profit is equal
Option 2:
M's share of revaluation profit is 1/5th
Option 3: M's share is revaluation profit is nil
Option 4: All of the above
Correct Answer:
M's share of revaluation profit is 1/5th
Solution : Answer = M's share of revaluation profit is 1/5th
When a new partner is admitted to a partnership, their share of revaluation profit is typically based on their agreed-upon profit-sharing ratio. Since M is admitted for a 1/5 share, their share of revaluation profit would also be 1/5th, in accordance with their profit-sharing ratio.
Hence, the correct option is 2.
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