Admission Of A Partner Solutions
Reconstitution of partnership
ADMISSION OF A PARTNER
SOLUTIONS
1. Since a new partner gets his share of profit from old partners, he must compensate the old partners for the share sacrificed by them. The amount of compensation given by the new partner is known as goodwill.
2. Assets and liabilities are revalued because the entire profit and loss due to their revaluation is divided amongst the old partners in their old profits sharing ratio.
The new partner should not share such profit or loss because it belongs to the period prior to his admission.
3. General Reserve A/c
Dr.
Profit & Loss A/c
Dr.
To old partner’s capital A/c
(In old ratio)
4. When the circumstances premium for the goodwill in cash to the old partners privately outside the business no entries are passed for it.
5. Calculation of new profit sharing ratio:
Let total profit be = 1
Share given to Z = 1/3
Remaining share = 1-1/3 = 2/3
Now the old partners will share remaining profit in their old profit sharing ratio: Hence, x’s share = 3/4 of 2/3 = 6/12 or ¾ * 2/3 = 6/12 y’s share = ¼ of 2/3 = 2/12 or ¼ * 2/3 = 2/12 z’s share = 1/3
Thus, the new profit sharing ratio of x, y and z will be:
= 6/12 : 2/12 : 1/3
= (6:2:4)/12 = 6:2:4 or 3:1:2
6. Share of profit given to C = 1/5
Share acquired by C from A = ½ of 1/5 = 1/10
Share acquired by C from B = ½ of 1/5 = 1/10
Therefore,
A’s new share after surrendering 1/10 in C’s favour
= ¾ - 1/10 = (15-2)/20
= 13/20
B’s new share after surrendering 1/10 in C’s favour
= 1/4 - 1/10 = (5-2)/20
= 3/20
C’s share
= 1/10 + 1/10 = 2/10
Therefore new share equal to
13/20:3/20: 2:10
= (13:3:4)/20
= 13:3:4 Ans.
7. Share of profit given to ‘C’ = 1/3 share
Share acquired by C from A = 1/3 * 2/3 = 2/9
Share acquired by C from B = 1/3 * 1/3 = 1/9
A’s new share after surrendering 2/9 = 2/3 – 2/9 = (6-2)/9
= 4/9
B’s new share after surrendering 1/9 = 1/3 – 1/9 = (3-1)/9
= 2/9
C’s share = 1/3
Therefore, new profit sharing ratio
= 4/9 : 2/9: 1/3 = (4:2:3)/9 or 4:2:3
8. x : y – 3 :
ADMISSION OF A PARTNER
SOLUTIONS
1. Since a new partner gets his share of profit from old partners, he must compensate the old partners for the share sacrificed by them. The amount of compensation given by the new partner is known as goodwill.
2. Assets and liabilities are revalued because the entire profit and loss due to their revaluation is divided amongst the old partners in their old profits sharing ratio.
The new partner should not share such profit or loss because it belongs to the period prior to his admission.
3. General Reserve A/c
Dr.
Profit & Loss A/c
Dr.
To old partner’s capital A/c
(In old ratio)
4. When the circumstances premium for the goodwill in cash to the old partners privately outside the business no entries are passed for it.
5. Calculation of new profit sharing ratio:
Let total profit be = 1
Share given to Z = 1/3
Remaining share = 1-1/3 = 2/3
Now the old partners will share remaining profit in their old profit sharing ratio: Hence, x’s share = 3/4 of 2/3 = 6/12 or ¾ * 2/3 = 6/12 y’s share = ¼ of 2/3 = 2/12 or ¼ * 2/3 = 2/12 z’s share = 1/3
Thus, the new profit sharing ratio of x, y and z will be:
= 6/12 : 2/12 : 1/3
= (6:2:4)/12 = 6:2:4 or 3:1:2
6. Share of profit given to C = 1/5
Share acquired by C from A = ½ of 1/5 = 1/10
Share acquired by C from B = ½ of 1/5 = 1/10
Therefore,
A’s new share after surrendering 1/10 in C’s favour
= ¾ - 1/10 = (15-2)/20
= 13/20
B’s new share after surrendering 1/10 in C’s favour
= 1/4 - 1/10 = (5-2)/20
= 3/20
C’s share
= 1/10 + 1/10 = 2/10
Therefore new share equal to
13/20:3/20: 2:10
= (13:3:4)/20
= 13:3:4 Ans.
7. Share of profit given to ‘C’ = 1/3 share
Share acquired by C from A = 1/3 * 2/3 = 2/9
Share acquired by C from B = 1/3 * 1/3 = 1/9
A’s new share after surrendering 2/9 = 2/3 – 2/9 = (6-2)/9
= 4/9
B’s new share after surrendering 1/9 = 1/3 – 1/9 = (3-1)/9
= 2/9
C’s share = 1/3
Therefore, new profit sharing ratio
= 4/9 : 2/9: 1/3 = (4:2:3)/9 or 4:2:3
8. x : y – 3 :