If the value of vehicles is reduced on the admission of a partner, what type of revaluation effect is it?

Correct answer: Loss

The governing concept is that assets must be shown at their revised values when a new partner is admitted, and any fall in an asset’s value is treated as a revaluation loss. Vehicles are assets. Therefore, if their recorded value is reduced, the reduction is debited to the Revaluation Account and is later borne by the old partners in their old profit-sharing ratio. Option A is correct. Option B would apply to an increase in the vehicle value. Option C is not the name of the revaluation result, although capital accounts may eventually be affected. Option D concerns the value of business reputation and is a separate goodwill matter.