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JAMB Principles of Accounts 1995 Question 35

Question 35

Partnership Admission, Retirement and Dissolution

A partnership on admitting a new member, revalued the business' land and building from ₦30 000 to ₦70 000. The difference of ₦40 000 should be

  1. A.credited to land and building account
  2. B.debited to asset revaluation account
  3. C.credited to asset revaluation account
  4. D.credited to profit and loss appropriation account.
Show the answer and explanation

Answer: C (credited to asset revaluation account)

Explanation

The land and building account is debited with the ₦40 000 increase, and the gain is credited to the revaluation account (later shared among the old partners).