Q.Rajesh and Ramesh are partners sharing profits and losses in the ratio of 3 : 2. Raman is admitted as a new partner and the new profit sharing ratio is decided as 5 : 3 : 2. The following revaluations are made. Prepare Revaluation account.

On admission, assets and liabilities are revalued to their current worth so that any profit or loss on this revaluation — and any accumulated reserve or undistributed profit/loss already sitting in the old balance sheet — belongs entirely to the OLD partners, in their OLD profit-sharing ratio, since it arose before the new partner joined. A Revaluation Account is opened: it is debited with any decrease in an asset, increase in a liability, or a newly-recorded unrecorded liability; it is credited with any increase in an asset, decrease in a liability, or a newly-recorded unrecorded asset. The resulting profit or loss is transferred to the old partners' capital accounts in the old ratio. Reserves and accumulated profits (General Reserve, Reserve …