Question

Balance Sheet of A, B & C as on 31st March, 2025

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	11,000	Buildings	20,000
Reserve Fund	6,000	Machinery	30,000
A Capital 30,000 B Capital 25,000 C Capital 15,000	70,000	Stock	10,000
		Patents	11,000
		Debtors	8,000
		Cash	8,000
	87,000		87,000

C retires and following revaluations took place.
Patents be valued at Rs.8,000; Machinery at Rs.28,000; and Buildings at Rs.25,000.
Find Revaluation Profit/Loss

• A. Revaluation profit Rs 10,000
• B. Revaluation Loss Rs 10,000
• C. Revaluation profit Rs 4,000
• D. No Profit, No Loss on Revaluation

Hint:

Patents fall by 3,000 and machinery falls by 2,000. Buildings rise by 5,000. Compare the totals.

Answer 1

The Correct Option is D

Step 1: Understand the concept.
On revaluation, an asset that rises in value gives a gain. An asset that falls in value gives a loss. The net effect is the revaluation profit or loss.

Step 2: Work out each asset.
Patents: book value Rs 11,000, new value Rs 8,000. Decrease = Rs 3,000 (loss).
Machinery: book value Rs 30,000, new value Rs 28,000. Decrease = Rs 2,000 (loss).
Buildings: book value Rs 20,000, new value Rs 25,000. Increase = Rs 5,000 (gain).

Step 3: Add the losses and the gain.
Total losses = 3,000 + 2,000 = Rs 5,000.
Total gain = Rs 5,000.
\[ \text{Net} = 5{,}000 - 5{,}000 = 0 \]

Step 4: Check the options.
Rs 10,000 profit and Rs 10,000 loss would need the gain and loss to be far apart, which they are not. Rs 4,000 profit does not match any adding of the three changes. The net is zero, so the last option is right.

Step 5: Note on other items.
Stock, debtors and cash are not revalued. Creditors and the reserve fund do not change either, so they have no effect on the answer.

Final Answer:
There is neither profit nor loss on revaluation.
\[ \boxed{\text{No profit, no loss}} \]