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Revaluation profit or loss: Class 12 practice

On reconstitution, assets and liabilities are revalued. Read the method, follow the three worked examples, then try the six questions.

What you should know first

  • Ratios

The idea behind revaluation profit or loss

On reconstitution, assets and liabilities are revalued. Increase in assets or decrease in liabilities is a gain; decrease in assets or increase in liabilities is a loss. Net gain or loss is shared by old partners in their old ratio.

Step-by-step method

  1. List each change as gain or loss.
  2. Net = gains − losses.
  3. Share in old ratio.

Worked example 1 (Basic)

On admission: building appreciated ₹40,000, stock reduced ₹6,000, provision for doubtful debts created ₹3,000, an unrecorded creditor of ₹4,000 found. Old ratio 2 : 1. Find the revaluation result and each partner's share.

  1. Gains ₹40,000; losses ₹13,000
  2. Net profit ₹27,000
  3. A ₹18,000, B ₹9,000
  4. Answer: Profit ₹27,000: A ₹18,000, B ₹9,000

Worked example 2 (Standard)

On admission: building appreciated ₹60,000, stock reduced ₹6,000, provision for doubtful debts created ₹1,000, an unrecorded creditor of ₹4,000 found. Old ratio 1 : 1. Find the revaluation result and each partner's share.

  1. Gains ₹60,000; losses ₹11,000
  2. Net profit ₹49,000
  3. A ₹24,500, B ₹24,500
  4. Answer: Profit ₹49,000: A ₹24,500, B ₹24,500

Worked example 3 (Challenge)

On admission: building appreciated ₹30,000, stock reduced ₹4,000, provision for doubtful debts created ₹3,000, an unrecorded creditor of ₹2,000 found. Old ratio 1 : 1. Find the revaluation result and each partner's share.

  1. Gains ₹30,000; losses ₹9,000
  2. Net profit ₹21,000
  3. A ₹10,500, B ₹10,500
  4. Answer: Profit ₹21,000: A ₹10,500, B ₹10,500

Common mistakes and misconceptions

  • Treating an increase in a liability as a gain
  • Sharing in the new ratio

Practice questions

  1. (Basic) On admission: building appreciated ₹1,00,000, stock reduced ₹10,000, provision for doubtful debts created ₹5,000, an unrecorded creditor of ₹3,000 found. Old ratio 1 : 1. Find the revaluation result and each partner's share.
  2. (Basic) On admission: building appreciated ₹50,000, stock reduced ₹2,000, provision for doubtful debts created ₹1,000, an unrecorded creditor of ₹4,000 found. Old ratio 5 : 3. Find the revaluation result and each partner's share.
  3. (Standard) On admission: building appreciated ₹40,000, stock reduced ₹4,000, provision for doubtful debts created ₹3,000, an unrecorded creditor of ₹2,000 found. Old ratio 1 : 1. Find the revaluation result and each partner's share.
  4. (Standard) On admission: building appreciated ₹50,000, stock reduced ₹10,000, provision for doubtful debts created ₹5,000, an unrecorded creditor of ₹1,000 found. Old ratio 3 : 2. Find the revaluation result and each partner's share.
  5. (Challenge) On admission: building appreciated ₹70,000, stock reduced ₹8,000, provision for doubtful debts created ₹5,000, an unrecorded creditor of ₹1,000 found. Old ratio 2 : 1. Find the revaluation result and each partner's share.
  6. (Challenge) On admission: building appreciated ₹10,000, stock reduced ₹10,000, provision for doubtful debts created ₹4,000, an unrecorded creditor of ₹3,000 found. Old ratio 2 : 1. Find the revaluation result and each partner's share.

Answer key with full working

  • Q1: Gains ₹1,00,000; losses ₹18,000 → Net profit ₹82,000 → A ₹41,000, B ₹41,000 → Answer: Profit ₹82,000: A ₹41,000, B ₹41,000
  • Q2: Gains ₹50,000; losses ₹7,000 → Net profit ₹43,000 → A ₹26,875, B ₹16,125 → Answer: Profit ₹43,000: A ₹26,875, B ₹16,125
  • Q3: Gains ₹40,000; losses ₹9,000 → Net profit ₹31,000 → A ₹15,500, B ₹15,500 → Answer: Profit ₹31,000: A ₹15,500, B ₹15,500
  • Q4: Gains ₹50,000; losses ₹16,000 → Net profit ₹34,000 → A ₹20,400, B ₹13,600 → Answer: Profit ₹34,000: A ₹20,400, B ₹13,600
  • Q5: Gains ₹70,000; losses ₹14,000 → Net profit ₹56,000 → A ₹37,333, B ₹18,667 → Answer: Profit ₹56,000: A ₹37,333, B ₹18,667
  • Q6: Gains ₹10,000; losses ₹17,000 → Net loss ₹7,000 → A ₹-4,667, B ₹-2,333 → Answer: Loss ₹7,000: A ₹4,667, B ₹2,333

Syllabus note

This skill is listed under "Admission of a Partner" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.

Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.

Related practice and notes

Frequently asked questions

Which chapter is revaluation profit or loss in?

"Admission of a Partner", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.

How were the answers checked?

Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.

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