Correct Option: C. Credited to asset revaluation account Detailed Explanation: When a partnership admits a new member, it often requires a revaluation of the partnership's assets to reflect their current market value. In this case, the land and building were revalued from N30,000 to N70,000. This means that the value of the land and building increased by N40,000 (N70,000 - N30,000).

1. Understanding Revaluation:
2. Revaluation is the process of adjusting the book value of an asset to its fair market value. This is important for accurately reflecting the financial position of the partnership, especially when new partners are admitted.
3. The increase in value (N40,000) represents a gain that needs to be recorded in the financial statements.
4. Asset Revaluation Account:
5. The asset revaluation account is a special account used to record increases in the value of assets. When an asset is revalued upwards, the increase is credited to this account.
6. In this scenario, since the land and building increased in value by N40,000, this amount should be credited to the asset revaluation account.
7. Journal Entry:
8. The journal entry to record this revaluation would be:
   • Debit: Land and Building Account N70,000 (to reflect the new value)
   • Credit: Asset Revaluation Account N40,000 (to record the increase in value)
   • Credit: Land and Building Account N30,000 (to remove the old value)
9. This entry ensures that the asset is now recorded at its fair market value, and the increase is recognized in the revaluation account.

Why Other Options Are Incorrect:

• Option A: Credited to land and building account:
• This option is incorrect because the land and building account should reflect the new value of the asset, not just the increase. The increase is specifically recorded in the asset revaluation account, while the land and building account is adjusted to its new total value.
• Option B: Debited to asset revaluation account:
• This option is incorrect because a debit to the asset revaluation account would imply a decrease in value, which is not the case here. The asset has appreciated, so we need to credit the revaluation account to reflect the increase.
• Option D: Credited to profit and loss appropriation account:
• This option is incorrect because the profit and loss appropriation account is used for distributing profits among partners, not for recording asset revaluations. The increase in asset value does not directly affect the profit and loss account; it is a balance sheet adjustment.

Summary of Key Points:

• The increase in asset value due to revaluation should be credited to the asset revaluation account.
• The asset revaluation account reflects gains from revaluations, while the land and building account shows the current value of the asset.
• Proper journal entries are crucial for accurately reflecting changes in asset values.
• Understanding the purpose of different accounts (like revaluation vs. profit and loss) is essential for correct financial reporting.