• 1 Marks

FA – Nov 2013 – L1 – SA – Q11 – Partnership Accounts

Reason for revaluing assets when partnership composition changes.

Assets must be revalued where there is a change in the partnership composition because:

A. Inflation affects the values of partnership assets
B. The economic value of the partnership must be enhanced
C. Deflation affects the value of partnership assets
D. It helps to prevent injustice to the concerned partners
E. The law insists that there should be a revaluation

D. It helps to prevent injustice to the concerned partners

Explanation:
Revaluing assets ensures that any changes in partnership composition, such as new partners joining or old partners leaving, do not unfairly benefit or disadvantage any partner by reflecting the true current value of the assets.

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