Prepaid salary of ₹30,000 appears as an asset, but only ₹22,500 is beneficial. What happens in Revaluation Account?

Correct answer: Debit ₹7,500

The governing concept is reduction of an asset to its realistic or beneficial value during revaluation. The books show prepaid salary of ₹30,000, but the firm will receive benefit worth only ₹22,500. The excess recorded value is therefore ₹30,000 − ₹22,500 = ₹7,500. This reduction represents a loss because the asset is overstated by ₹7,500. The asset is reduced and Revaluation Account is debited by ₹7,500. Hence option A is correct. Option B gives the wrong direction for a fall in value. Option C records the remaining useful value rather than the reduction, while option D treats the original book value as a gain without considering its reduced benefit.