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Asked Nov 24, 2019
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Why are assets revalued and liabilities reassessed at the time of change in profit sharing ratio?

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Expert Answer

Step 1

Meaning of Revaluation of Assets

A revaluation of assets is an action that may be required to accurately describe the true value of the capital goods a business owns. Revaluation of assets is undertake to determine the current value of the assets owned by organization.

Step 2

Following is the reason of assets revalued and liabilities assessed at the time of change in profit sharing ratio:

The assets are re-valued and liabilities are reassessed so that: The assets are overstated or understated...

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