On admission, the firm creates a provision of ₹16,000 for repair of old furniture. What will be its effect in Revaluation Account?

Correct answer: ₹16,000 डेबिट

The governing concept is that a provision created for an expected future repair is treated as a liability or anticipated loss arising at the time of reconstitution. Creating a provision of ₹16,000 reduces the net value of the firm and therefore produces a loss. Accordingly, Revaluation Account is debited by ₹16,000, while a provision or liability account is credited by the same amount. Option B is correct. Option A would treat the provision as a gain, which is the opposite effect. Option C records a direct reduction or change in furniture, but the facts specifically describe creation of a repair provision, not a change in furniture’s book value. Option D ignores the new obligation.