Partners G, H, and I share profits in the ratio $4:3:3$. The firm’s net assets before admission of a new partner J are Rs. 6,00,000. After J is admitted, the assets are revalued: the building increases by Rs. 40,000 and the stock decreases by Rs. 10,000. What amount should be credited to the revaluation reserve?

Step-by-step solution

1. Calculate the total change in assets: $+40,000-10,000=+30,000$.
2. Add this change to the original net assets to get the new net assets: $6,00,000+30,000=6,30,000$.
3. The revaluation reserve equals the increase in net assets due to revaluation: $6,30,000-6,00,000=30,000$.
4. Thus Rs. 30,000 should be credited to the revaluation reserve.

Concept tested: Revaluation reserve on admission

Published 24 September 2026 · How this solution was prepared and checked