SECTION - 2 RECONSTITUTION OF PARTNERSHIP (CHANGE IN REVENUE SHARING RATIO AMONG THE EXISTING PARTNERS, ADMISSION OF A PARTNER, RETIREMENT/DEATH OF ANY PARTNER)
Entrance of a Spouse
Learning goals: After studying this lesson, the students should be able to: п‚· п‚· п‚· п‚· п‚· п‚· п‚· п‚· Identify and deal efficiently with the condition of reconstitution of partnership. Identify the problem arising due to admission of your partner inside the firm. Compute new and sacrifice rate in different cases. Understand, compute and help to make treatment of goodwill in different circumstances. Make accounting treatment of the revaluation of assets and liabilities and distribute the money and damage on revaluation among the older partners. Make accounting take care of unrecorded possessions and debts Prepare capital Accounts, Cash A/c and Balance Sheet from the New organization Adjust the PartnersвЂ Capital Accounts
Salient Points: 1 . Goodwill is the monetary value of business standing. It is an intangible asset. installment payments on your Goodwill may be of two sorts: a. Bought goodwill n. Non-purchased goodwill 3. When ever existing company faces trouble of limited financial resources and man electric power then one new additional spouse enters into firm. some. There are three methods of value of goodwill: a. Common Profit Technique b. Super Profit technique c. Capitalization Method five. When fresh partner is definitely admitted in existing relationship then existing partners need to sacrifice in favour of new partner, it is named sacrificing percentage. 22
6. Share of goodwill of recent partner will probably be credited to sacrificing associates into their compromising ratio. several. At the entrance of new spouse Profit & Loss about revaluation of assets and liabilities and balances of accumulated income & deficits will be allocated among aged partners (only) in aged ratio. Ql. At the time of difference in profit showing ratio among the list of existing lovers, where would you like to record a great unrecorded the liability? Ans. Q2. Revaluation Account-Debit side Anand, Bhutan and Chadha will be partners sharing profits in ratio of 3: 2: 1 ) On first April 3 years ago, they chosen to share profits equally. Identity the lovers who is attaining on consequence of such change. Ans. Q3. Ans. Chadha. Offer two characteristics of goodwill. (i) costly intangible property having a definite value. (ii) It helps in earning more profit. Q4. Ans. Q5. Name virtually any two elements affecting goodwill of a relationship firm. (i) Favorable area (ii) Period of time
In a collaboration firm property are Rs. 5, 00, 000 and liabilities will be Rs. two, 00, 000. The normal income rate is usually 15%. State the amount of normal profits.
Rs. 45, 000 State the amount of goodwill, in the event that goodwill is to be valued based on 2 yearsвЂ purchase of previous yearвЂs income. Profit from the last year was Rs. 20, 000.
Ans. Q7. Ans.
Rs. forty, 000 Wherever will you record вЂ—increase in machineryвЂ in case of change in income sharing percentage among the existing partners? Revaluation Account- Credit rating Side. 23
Q8. Ans. Q9 Ans. Q twelve.
Name two methods for valuation of goodwill in case of alliance firm. (i) Average Income Method (ii) Super Income Method Offer formula intended for calculating goodwill under вЂ—super profit methodвЂ. Goodwill = Super Income x Range of YearsвЂ Purchase. Pass the journal entry for increase in the value of property or decline in the value of financial obligations in the Revaluation A/c?
Assets Air-conditioning Liabilities A/c
(with the amount of increase)
Dr . (with the amount of decrease) (with the exact amount of gain)
To Revaluation A/c
(Being revaluation of assets and liabilities) Qll. P, Q and L are companions in a firm sharing revenue in the ratio of 2: two: 1 on 1 . some. 2007 the partners chose to share upcoming profits inside the ratio of three: 2: one particular on that day "balance sheet" of the organization shows Basic Reserve of Rs arrange. Ans. Basic Reserve To PвЂs Capital A/c To QвЂs Capital A/c To RвЂs Capital A/c (Being Reserve distributed) gain. вЂ– Journalise this statement. Ans. Gaining PartnerвЂs Capital Air-conditioning To Compromising PartnerвЂs Capital A/c Dr A/c Doctor...