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what do u mean by "Stock was valued at 25% above cost .It was brought into the books of the new firm atCost price".In the Balance Sheet,stock is shown as 35000.

It meams the actual value oisvalue of stock + 25% of stock i.e......35000 + 8750 = 43750
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wat value will cum n da new balance sheet revaluation account....?
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look , the stock was valued more by 8750 right ? but now you are supposed to rectify it . so, you'll have to decrease it's value which means that it will come it debit side (8750 as debit in revaluation means decrease in assets) . is it clear ?
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and yaa ... you'll write 35,000- 8750 = 26250 in the new balance sheet !
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I think the value that will come in balance sheet will be rs.28000. As the given value ,i.e., 35000 is 25% above cost so now let cost be x
we can say x+25% of x=35000,i.e., x+25/100x=35000 now x+1/4 x= 35000 that means x=4/5*35000 now ,i.e.,x=28000.
HOPE IT HELPS.....
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In the given balance sheet the value of your stock is valued at 25% above actual cost. So while revaluing the assets you should bring down the value of stock 35000 is the value which is above the actual stock value You can find then amount to be decreased by doing this =(35000*25)/125 =7000 now the actual value to be shown in new balance sheet is (35000-7000)=28000 And you have to debit the revaluation account by 7000
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