Question

When partners decide not to revalue assets and liabilities at the time of death of a partner, Deceased Partner’s Capital Account is credited with revaluation gain and Gaining Partners' Capital Accounts are adjusted in:

• A. Old ratio
• B. Sacrificing ratio
• C. Gaining ratio
• D. New profit-sharing ratio

Hint:

Retirement/death adjustments → always use gaining ratio for remaining partners.

Answer 1

The Correct Option is C

Concept: At the time of retirement or death, goodwill and revaluation adjustments are shared among remaining partners based on gaining ratio. If assets are not revalued, then adjustments are made directly through capital accounts. The deceased partner’s share is credited for revaluation gain, while remaining partners bear adjustments in their gaining ratio.

Step 1: Understand non-revaluation condition.
Assets are NOT revalued, so no Revaluation Account is prepared.

Step 2: Effect on deceased partner.
Deceased partner is credited for his share of hidden gains.

Step 3: Effect on remaining partners.
Gaining partners absorb adjustment in: \[ \text{Gaining ratio} \] Final Answer: Gaining ratio