A and B share 4:1. Revaluation profit is ₹20000 but new ratio will be 3:2:1. In which ratio will profit be distributed?

Correct answer: 4:1

The direct answer is Option A: the ₹20,000 revaluation profit is distributed in the old ratio 4:1. Revaluation concerns the values of assets and liabilities that existed before the new partner entered. Therefore, the profit belongs only to A and B, the old partners. The new ratio 3:2:1 is used for profits and losses arising after admission, not for the old revaluation result. Step by step, the revaluation profit is ₹20,000, and the old ratio is 4:1. Total parts are 5. A receives ₹20,000 × 4/5 = ₹16,000, and B receives ₹20,000 × 1/5 = ₹4,000. Option A is correct. Option B is wrong because 3:2:1 includes the new partner and applies after admission. Option C is wrong because nothing in the question says the old partners share equally. Option D is wrong because sacrificing ratio is used mainly to calculate compensation for the sacrifice made by old partners in favour of the incoming partner, not to distribute revaluation profit. Memory cue: old item, old ratio; future item, new ratio.