The business may revalue some of the assets to reflect their fair values (e.g.) based on market price. The revaluation is normally done when a new partner is to be admitted or an old partner is retiring.
Any revaluation gains or losses are passed through a new account (i.e) a Revaluation account and the balance on this account profit or low on revaluation is transferred to the partner’s capital accounts in the existing profit sharing ratio.


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