After revaluation, the revised balance sheet must show debtors at ₹58,000. Old debtors were ₹65,000 and there was no separate provision. What is recorded in the Revaluation Account?

Correct answer: ₹7,000 debit

The relevant principle is that a reduction in the book value of an asset creates a revaluation loss. Debtors originally stood at ₹65,000, but their revised value is only ₹58,000. The decrease is therefore calculated as ₹65,000 − ₹58,000 = ₹7,000. Since there was no existing provision, no further adjustment is needed before making this comparison. The ₹7,000 loss is debited to the Revaluation Account, and the revised balance sheet will show debtors at ₹58,000. A credit entry would represent an increase or gain, not a decrease. The figures ₹58,000 and ₹65,000 are balances, not the amount of the revaluation adjustment.