Partnership Asset Revaluation Triggers

Steps:

• Identify common events in partnerships that affect asset values: admission of new partner, retirement/dissolution, and changes in profit-sharing ratio.
• Recall that revaluation ensures fair asset values for new partners or adjustments in ownership.
• Match to factors: assume 1=admission of new partner (triggers revaluation), 2=change in profit-sharing without revaluation needed, 3=retirement of partner (requires revaluation for settlement).
• Select combination where both 1 and 3 apply, excluding 2.

Why B is correct:

• Under partnership accounting (e.g., IAS 28 or local GAAP), revaluation occurs on admission (1) to reflect current values for incoming partner and on retirement (3) for accurate dissolution payments, but not always for ratio changes (2).

Why the others are wrong:

• A includes 2, which doesn't mandate revaluation as ratios can adjust without asset changes.
• C omits 3, ignoring retirement's need for fair value settlement.
• D excludes 1, missing admission's requirement for equitable contribution.

Final answer: B