If Revaluation Account shows only an increase in assets of ₹45,000 and an increase in liabilities of ₹18,000, what is the net result?

Correct answer: ₹27,000 profit

Revaluation records changes in the values of assets and liabilities at the time of reconstitution. An increase in an asset increases the firm’s net assets, so it is a gain and is credited to Revaluation Account. An increase in a liability increases the firm’s obligation, so it is a loss and is debited to that account. The net result is calculated as gain minus loss: ₹45,000 − ₹18,000 = ₹27,000. Since the gain is greater than the loss, the account shows a net profit of ₹27,000, which is transferred to the old partners in their old ratio. Therefore option A is correct; ₹63,000 would incorrectly add two unlike effects.