A & B shares profit & loss equally. They admit C as an equal partner and asset were revalued as follow: Goodwill at Rs 30,000 (book value NIL). Stock at Rs 20,000 (book value Rs 12,000); Machinery at Rs 60,000 (book value Rs 55,000). C is to bring in Rs 20,000 as his capital and the necessary cash towards his share of Goodwill. Goodwill account will not be shown in the books. Find the profit/loss on revaluation to be shared among A, B & C.

Only the revaluation of stock and machinery affects the revaluation profit, giving a total profit of (20000 minus 12000) plus (60000 minus 55000), which equals 13000. Because the question specifies that the goodwill account will not be shown in the books, the unrecorded 30000 goodwill is excluded from the revaluation calculation. A and B share this 13000 profit equally in their old ratio, resulting in a profit distribution of 6500 to A, 6500 to B, and 0 to C.

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