Revaluation loss and goodwill adjustment on partner admission

Steps:

• Revalue assets downward by $6,000; debit loss to old partners' capitals equally, so L's capital decreases by$3,000.
• Value goodwill at $30,000 but do not raise in books; credit to old partners' capitals equally, so L's capital increases by$15,000.
• Net effect: initial decrease from revaluation, followed by increase from goodwill.
• Overall, L's capital shows a decrease then an increase.

Why A is correct:

• Under partnership admission rules (e.g., IAS 28 or standard accounting), revaluation losses reduce old partners' capitals in sharing ratio, while unrecorded goodwill is credited to them, creating a decrease-increase sequence.

Why the others are wrong:

• B: Ignores goodwill credit, assuming only decrease.
• C: Reverses the order; revaluation causes decrease first, not increase.
• D: Goodwill always increases old partners' capitals, not decreases.

Final answer: A