Question

Some adjustments are to be made at the time of the retiring partner.

(i) New profit sharing ratio of continuing partners

(ii) Accounting treatment of Goodwill

(iii) Sacrificing ratio of continuing partners

(iv) Accounting treatment of joint life policy.

Which of the above adjustments are to be done?

Options

• (i), (ii) and (iv)

• (i), (iii), (ii)

• (i), (ii), (iii), (iv)

• (ii), (iii) and (iv)

Answer 1

(i), (ii) and (iv)

Explanation:

The following are some adjustments that must be made when a partner retires:

1. Continued partner's new profit-sharing ratio
2. Treatment of Goodwill in Accounting
3. Accounting for combined life insurance