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प्रश्न
Do you advise that assets and liabilities must be revalued at the time of admission of a partner? If so, why? Also describe how is this treated in the book of account?
उत्तर
Yes, it is advisable to revalue the assets and liabilities at the time of admission of a new partner for ascertaining the true and fair value of the assets and liabilities. This is done because the value of assets and liabilities may have increased or decreased and consequently their corresponding figures in the old balance sheet may either be understated or overstated. Moreover, it may also be possible that some of the assets and liabilities are left unrecorded. Thus, in order to record the increase and decrease in the market value of the assets and liabilities, Revaluation Account is prepared and any profits or losses associated with this increase or decrease are distributed among the old partners of the firm.
Accounting Entries in the Books of Accounts:
The following Journal entries are recorded in the Revaluation Account on the date of admission of a new partner.
i)For increase in value of assets:
Assets A/c Dr.
To Revaluation A/c
(Increase in the value of assets)
ii) For decrease in value of assets:
Revaluation A/c Dr.
To Asset A/c
(Decrease in the value of assets)
iii) For increase in liabilities:
Revaluation A/c Dr.
To Liabilities
(Increase in the value of liabilities)
iv) For decrease in liabilities:
Liability A/c Dr.
To Revaluation A/c
(Decrease in the value of liabilities)
v) For recording of unrecorded assets:
Unrecorded Assets A/c Dr
To Revaluation A/c
(Recording of unrecorded assets)
vi) For recording of unrecorded liabilities:
Revaluation A/c Dr
To Unrecorded Liabilities A/c
(Recording of unrecorded liabilities)
vii) For transfer of credit balance of Revaluation Account:
Revaluation Dr
To Old Partner’s Capital A/c
(Profit on revaluation is transferred to the Old Partner’s Capital Account in their old profit sharing ratio)
Or,
vii) For transfer of debit balance of Revaluation Account:
Old Partner’s Capital A/c Dr.
To Revaluation A/c
(Loss on revaluation is transferred to the Old Partner’s Capital Account in their old profit sharing ratio)
APPEARS IN
संबंधित प्रश्न
Arti and Bharti are partners in a firm sharing profits in 3:2 ratio, They admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs. 50,000 for his capital and Rs. 10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at Rs. 5,000. the new profit sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the necessary journal entries in the books of the new firm?
Amit and Viney are partners in a firm sharing profits and losses in 3:1 ratio. On 1.1.2017 they admitted Ranjan as a partner. On Ranjan’s admission the profit and loss account of Amit and Viney showed a debit balance of Rs 40,000. Record necessary journal entry for the treatment of the same.
A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet on March 31, 2016 was as follows:
|
Balance Sheet of A and B as on March 31, 2016 |
||||
|
Liabilites |
Amount (Rs) |
Assets |
Amount (Rs) |
|
|
Sundry creditors |
41,500 |
Cash at Bank |
26,500 |
|
|
Reserve fund |
4,000 |
Bills Receivable |
3,000 |
|
|
Capital Accounts |
|
Debtors |
16,000 |
|
|
|
A |
30,000 |
Stock |
20,000 |
|
|
B |
16,000 |
Fixtures |
1,000 |
|
|
|
Land & Building |
25,000 |
|
|
|
91,500 |
|
91,500 |
|
On April 1,2017, C was admitted into partnership on the following terms:
- That C pays Rs 10,000 as his capital.
- That C pays Rs 5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
- That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.
- That the value of land and buildings be appreciated by 20%.
- There being a claim against the firm for damages, a liability to the extent of Rs 1,000 should be created.
- An item of Rs 650 included in sundry creditors is not likely to be claimed and hence should be written back.
Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing ratio between A and B has not changed. Prepare the new Balance Sheet on the admission of C.
A and B are partners sharing profits and losses in the ratio of 3:1. On Ist Apr. 2017 they admitted C as a new partner for 1/4 share in the profits of the firm. C brings Rs 20,000 as for his 1/4 share in the profits of the firm. The capitals of A and B after all adjustments in respect of goodwill, revaluation of assets and liabilities, etc. has been worked out at Rs 50,000 for A and Rs 12,000 for B. It is agreed that partner’s capitals will be according to new profit sharing ratio. Calculate the new capitals of A and B and pass the necessary journal entries assuming that A and B brought in or withdrew the necessary cash as the case may be for making their capitals in proportion to their profit sharing ratio?
Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2:1. Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in Rs 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance Sheet of Azad and Babli as on March 31, 2016 (before Chintan’s admission) was as follows:
|
Balance Sheet of A and B as on 31.03.2016 |
|||||
|
Liabilites |
Amount (Rs) |
Assets |
Amount (Rs) |
||
|
Creditors |
|
8,000 |
Cash in hand |
2,000 |
|
|
Bills payable |
|
4,000 |
Cash at bank |
10,000 |
|
|
General reserve |
|
6,000 |
Sundry debtors |
8,000 |
|
|
Capital accounts: |
|
|
Stock |
10,000 |
|
|
|
Azad |
50,000 |
|
Funiture |
5,000 |
|
|
Babli |
32,000 |
82,000 |
Machinery |
25,000 |
|
|
|
|
Buildings |
40,000 |
|
|
|
|
1,00,000 |
|
1,00,000 |
|
It was agreed that
i) Chintan will bring in Rs 12,000 as his share of goodwill premium.
ii) Buildings were valued at Rs 45,000 and Machinery at Rs 23,000.
iii) A provision for doubtful debts is to be created @ 6% on debtors.
iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts.
Record necessary journal entries, show necessary ledger accounts and prepare the Balance Sheet after admission.
X and Y were partners in a firm sharing profits and losses in the ratio of 2 : 1. Z was admitted for 1/3rd share in the profits. On the date of Z's admission, the Balance Sheet of X and Y showed General Reserve of ₹ 2,50,000 and a credit balance of ₹ 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Z's admission.
X and Y are partners in a firm sharing profits in the ratio of 3: 2. They admitted Z as a partner for 1/4th share. At the time of admission of Z, Stock (Book Value ₹ 1,00,000) is to be reduced by 40% and Furniture (Book Value ₹ 60,000) is to be reduced to 40%. Pass the necessary Journal entries.
A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20 respectively. E joins the partnership for 20% share and A, B, C and D in future would share profits among themselves as 3/10 : 4/10 : 2/10 : 1/10. Calculate new profit-sharing ratio after E's admission.
According to Section 30 of Partnership Act 1932:
(A) A Minor can be admitted as a partner by the consent of all partners for the time being.
(B) A new partner will bring capital and goodwill in cash.
(C) A new partner is allowed to share old profits.
(D) A new partner will inspect the books of accounts.
A and B are partners in firm sharing profits in the ratio of 4 : 3. They admit C as a new partner. New Ratio will be 2 : 3 : 1. Sacrificing ratio will be:
On the admission of a new partner:
At the time of admission of a partner, a new ratio will be calculated by:
Kalki and Kumud were partners sharing profits and losses in the ratio of 5:3. On 1st April,2021 they admitted Kaushtubh as a new partner and new ratio was decided as 3:2:1.
Goodwill of the firm was valued as ₹3,60,000. Kaushtubh couldn’t bring any amount for goodwill. Amount of goodwill share to be credited to Kalki and Kumud Account’s will be:
Complete the following sentence.
______ of a partner is a mode of reconstituting the firm.
According to which section of the Indian Partnership Act, 1932, a person be admitted as a new partner?
When a new partner enters into the partnership firm, old partners ______ some part of their old share.
A, B and C are partners in a firm. If D is admitted as a new partner:
The balance amount of Workmen Compensation Reserve, after meeting actual liability, at the time of admission of a new partner, will be transferred to:
