NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3

NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3

Accounting is one of those subjects with numerous applications in the real world. This does not, however, imply that this subject is easy to study or understand. Instead, every year, a large number of students complain that accounting is a challenging subject.

Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner, talks about how a partnership is an agreement among partners or members of a firm to share profits and losses from the business carried on by all or any of them acting on behalf of all. Any modification to this agreement constitutes a reorganisation of the partnership firm.

To excel in this tricky subject, students need to go through Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3. This study material contains detailed information, and the solutions are prepared by the subject matter experts in the Accounting field. 

Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3 proves beneficial for the students to study new concepts and revise them. In addition to these, students can use the Extramarks website to access a number of other study resources such as NCERT books, CBSE revision notes, CBSE sample papers, CBSE previous year question papers, etc.

Key Topics Covered In NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3

Below are the major topics covered in NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3- Reconstitution of a Partnership Firm- Admission of a Partner.

1) What is Reconstitution of a Partnership Firm?
2) Modes of Reconstitution of a Partnership Firm
3) Admission of a New Partner
4) New Profit Sharing Ratio
5) Sacrificing Ratio
6) Goodwill
7) Adjustment for Accumulated Profits and Losses
8) Revaluation of Assets and Reassessment of Liabilities
9) Adjustment of Capitals
10) Change in Profit Sharing Ratio among the Existing Partners

Let us look at in-depth information on each subtopic covered in Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3.

What is Reconstitution of a Partnership Firm?

A partnership refers to an agreement between two or more persons to split the profits from a transaction carried out by all of them or by any one acting on their behalf. Reconstitution of the partnership firm refers to any modification in the present agreement.

Modes of Reconstitution of a Partnership Firm

The following ways usually accomplish the reconstitution of a partnership firm:

  • Admission of a new partner: A new partner may be accepted when a company requires extra financial or organisational support. A new partner can be admitted when the current partners jointly grant their approval, according to the Partnership Act of 1932, which is diversely supplied in the deed of partnership.
  • Change in the profit-sharing ratio: An enterprise’s partners may decide to modify their present gain (profit) share ratio at any moment. 
  • Retirement of an existing partner: This refers to a partner’s departure from the firm’s business, which might be due to worsening health, old age, or a shift in company’s activity. In reality, if the partnership is created at will, a partner can leave at any moment. However, this leads to the firm’s reorganisation, with only two partners remaining.
  • Death of a partner: In case when one of the partners die and if the surviving partners decide to continue the company as usual, then the partnership will have to be rebuilt

Different modes of reconstitution for a Partnership firm are briefly covered above. To gain a deeper understanding of each of them, students can register on the Extramarks website to gain full access to  

NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3. Our Chapter-wise solutions give students step-by-step explanations on this topic.

Admission of a New Partner

One of the main factors for a company to seek new partners is to expand its business. Unless otherwise agreed upon, a new partner can be allowed into the business with the permission of all current partners under the Partnership Act of 1932.

With the addition of a new partner, the partnership firm is reconfigured, and all of the partners enter into a new agreement to conduct the firm’s operations.

The criteria that led to the inclusion of a new partner were as follows:

  • When the company is expanding and needs additional funds.
  • When the new partners have the skills to help, the firm expands its operations.
  • When the partner in issue has a good reputation and contributes to the firm’s goodwill.

When a new partner is admitted, the following modifications must be made:

  • Calculating the new profit sharing and sacrifice ratios.
  • Keeping track of goodwill.
  • Assets and liabilities are revalued.
  • Capital adjustment in accordance with the revised profit sharing ratio.

Few of the above scenarios might be difficult to understand by reading these bullet points. So we recommend students to go through Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3 to get  detailed and authentic solutions to all problems . All scenarios of when a new partner is admitted are explained with real-life examples and case studies for students to easily understand these difficult concepts.

Treatment of Goodwill in the Admission of a Partner

When a new partner joins the firm, they are entitled to a share of the firm’s future revenues. The act of admitting a new partner also results in a reduction in the existing partners’ future profit sharing ratio. As a result, a new partner must provide additional value in addition to cash, which is known as Premium for Goodwill.

The following circumstances shall govern the treatment of goodwill with the entry of a new partner:

  • When the goodwill payment is made privately.
  • When the sum required to pay the goodwill share is brought in cash.
  • When kindness is not exchanged for money.

These are some of the treatment of goodwill with the entry of a new partner as stated in Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3.

New Profit Sharing Ratio

The new profit sharing ratio is known as the ratio in which the existing and new partners agree to divide the profit and loss proportion in the future following the addition of the new partner. A new partner receives a few items after being accepted into an existing partnership company, as follows:

  • The existing partners relinquish a percentage of their gain in goodwill for the new associate partner when a new associate is admitted.
  • If nothing is said about how the new associate partner gets his share from the existing partners, it’s safe to assume he gets it through their gain (profit) sharing ratio.
  • The previous partners and the new associate partner collaborate to decide the new associate partner’s share and how he would get it from the presently existing partners.
  • As a result, determining the new profit sharing ratio among all associate partners is required. This is dependent on how the new associate partner collects his share from the previous partners, which can be done in various ways.
  • In any case, when a new partner is admitted, the profit-sharing ratio between the existing partners will alter, taking into account their respective contributions to the new arriving partner’s profit-sharing ratio.

Sacrificing Ratio

The sacrificing ratio is calculated when a new associate partner is added or admitted. It’s the part where the former partners hand over their share to the new partner.

A new collaborator is required to:

  • Reimburse the former partners for their loss of share in the company’s profits, which he receives in the form of a goodwill or premium payment.

The partners usually agree upon this ratio, and it might be the old ratio, an equal amount of sacrifice, or a predetermined ratio. 

The concept of Sacrificing ratio is explained in further detail in Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3.

Goodwill

A goodwill asset is generally an intangible asset acquired when one business buys another. Goodwill is usually recognised when the purchase price exceeds the total fair value of all the visible solid and intangible assets bought in during the transaction, as well as the liabilities taken in the transaction. Goodwill might include a company’s brand name, a solid customer base, good customer relations, good staff relations, and any patents or proprietary technologies.

There are two different kinds of goodwill:

  • Purchased: Purchased goodwill is known as the difference between the price paid for a firm as a continuing concern and the total value of its assets, subtracting the total value of its liabilities, each of which has been identified and appraised individually.
  • Inherent: It’s the difference between the business’s fair value and the fair value of its separable net assets. It’s known as internally produced goodwill, and it develops over time as a result of a company’s strong reputation. 

Adjustment for Accumulated Profits and Losses

After the dividend is paid, Accumulated Profits and Losses are the summations of an enterprise’s profits and losses. As covered in Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3, it’s also known as retained profits, retained capital, or earned surplus.

An enterprise’s profits may have accumulated but not yet been transferred to the partners’ capital accounts. The general reserve, reserve fund, and/or profit and loss account balance are the most common examples. The new partner, on the other hand, is not entitled to any of the accrued earnings. These are only distributed to the former partners by moving them to their capital accounts in accordance with the previous profit sharing ratio if there are any accumulated losses in the form of a Debit balance in the Profit and Loss Account on the balance sheet of the company.

Revaluation of Assets and Reassessment of Liabilities

It is usually preferable to establish whether the enterprise’s assets are shown in the books at their current valuations with the admission of a new partner. The assets must be revalued if they are overvalued or undervalued. A few factors that demonstrate why asset revaluation and liability reassessment is essential:

  • Obligations are reassessed so that the liabilities are reflected in the books at their correct values.
  • There may be specific assets and obligations of the company that go unrecognised and unrecorded from time to time. These must also be recorded in the business’s books. As a result, the company must define the Revaluation Account.
  • The profit or loss on revaluation of each asset and obligation is transferred to this account. The balance is transferred to the previous partners’ capital accounts in their old profit-sharing ratio.

The topic of Revaluation of Assets and Reassessment of Liabilities is complex to understand. Our  experienced faculty has simplified this topic for students in our Extramarks NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3 study notes.

Adjustment of Capitals

An adjustment of capital is a modification made to an account to compensate for the effect of inflation caused by changes in the cost of products and/or services consumed by the company. Stocks are not included in this calculation, but prepaid expenses, receivable invoices, and trade debtors are included.

At the time of admission, the partners may agree that their capital should be modified according to their profit sharing ratio. If the capital of the new partner is known, it can be used as a starting point for computing the new capital of the former partners. After all, adjustments relating to goodwill reserves and revaluation of assets and liabilities, etc., have been made, the capitals thus determined should be compared with their old capitals. The partner whose capital falls short will have to bring in the required amount to cover the lack of it, and the partner who has a plethora will withdraw the exceeding amount of capital.

Change in Profit Sharing Ratio among the Existing Partners

Without any retirement or admittance of a partner, the partners of an organisation decide to adjust their present or existing profit sharing ratio. This leads to certain partners earning an increased share of the enterprise’s future profits while others lose a portion of it.

Modifying the profit sharing ratio is one of the most common forms of reconstitution used to change the current partner ratio. This modification simply affects the value of profit-sharing between partners and has no impact on the existence of the company partners.

NCERT Solutions Class 12 Accountancy Partnership Accounts Chapter 3 Accounting for Share Capital NCERT Solutions – Exercise and Solutions

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Q.1 Identify various matters that need adjustments at the time of admission of a new partner.

Ans. Following are the problems that may arise at the time of admission of a partner:

  • New profit sharing ratio.
  • Sacrificing ratio.
  • Valuation and adjustment of goodwill.
  • Revaluation of assets and reassessment of liabilities.
  • Distribution of accumulated profits or losses and reserves.
  • Adjustment of partners’ capital.

Q.2 Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?

Ans. When a new partner is admitted, he acquires his share in profits from the old partners and thus reduces the old partners share in profit. Hence the problem of determining the new profit sharing ratio simply involves the determination of old partners’ new share in the profits of the reconstituted firm.

Q.3 What is sacrificing ratio? Why is it calculated?

Ans. Sacrificing ratio is the ratio in which the old partners have surrendered a part of their profit sharing ratio in favour of the incoming partner. This ratio is calculated as given below:

Sacrifice = Old Share – New Share

This ratio is calculated to facilitate the sharing of premium brought in by the new partner. This premium is shared by the old partners is sacrificing ratio.

Q.4 On what occasions sacrificing ratio is used?

Ans. Following are the occasions sacrificing ratio is used:

  • For disturbing amount of goodwill among old partners.
  • For calculating new profit sharing ratio.

Q.5If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?

Ans. The existing amount of goodwill will be written off by debiting old partner capital accounts in old ratio and creating goodwill /Premium account as shown below:

Date Particulars L.F. Dr. ₹ Cr. ₹
Old Partner’s Capital A/c Dr.
To Goodwill A/c
(Existing goodwill written off by transferring it to old partners capitals in old ratio)

Q.6 Why there is need for the revaluation of assets and liabilities on the admission of a partner?

Ans. Assets and liabilities should be revalued so that these are shown at the proper value and the resulting profit or loss on such revaluation is transferred to old partners in old ratio. Further the new partner acquires a right to share the assets of the partnership firm. So also they should be shown in the Balance Sheet as the present value and any gain or loss because of revaluation should belong to the old partners.

Q.7 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?

Ans. Assets and Liabilities should be revalued so that these are shown at the proper value and the resulting profit or loss on such revaluation is transferred to old partners in the old ratio. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. Further the new partner acquires a right to share the assets of the partnership firm. So also assets and liabilities should be shown in the Balance Sheet at the present value and any gain or loss because of revaluation should not borne by the new partner.

Revaluation account is a nominal account. Revaluation account is credited with the increase in value of each asset and decrease in liabilities because it is a gain. It is debited with the decrease in value of each asset and increase in liabilities because it is a loss. Similarly, unrecorded assets are credited and unrecorded liabilities are debited to the revaluation account. If revaluation account finally shows credit balance, then it indicates profit and if revaluation account shows debit balance, then it indicates loss.

Q.8 What is goodwill? What factors affect goodwill?

Ans. Goodwill is the money value of reputation of a firm in respect of the profits expected in future over and above the normal profits.

The factors that affect the value of goodwill:

Nature of Business: A firm that produces high value added products or having a stable demand is able to earn more profits and therefore has more goodwill.

Favourable location: If the business is centrally located or is at a place having customer traffic, the goodwill will have high than those businesses which are not so located.

Efficiency of management: If the management of a firm is more efficient and reputed, the value of goodwill in such business will be more as compared to be business whose management is not efficient.

Time Factor: The business which is running for the last several years on profitable lines will have more goodwill than a business which has been established only recently.

Patent: If the firm has its own patent, highly in demand than its value of goodwill will be high.

Capital Requirements: If a business requires more capital than its value of goodwill will be less as compared to a business where the capital requirement is less.

Q.9 Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash?

Ans. If new partner does not bring his share of goodwill in cash, new partner’s Capital or Current account is debited for his share of goodwill and the sacrificing partners’ capital accounts are credited in their sacrificing ratio.

Following journal entry will be:

Dt. Particulars L.F. Dr. ₹ Cr. ₹
New partner’s Capital/ Current A/c Dr.
To Sacrificing partner’s Capital/Current A/c

For example, M and N who share profits in the ratio of 3:2 had capitals of ₹2,00,000 and ₹1,50,000 respectively. They agreed to admit P into partnership from 1st April, 2013 on the following terms in return for 1/3rd share in future profits:

That P should bring in ₹2,00,000 as capital.
That as P is unable to bring in his share of goodwill in cash, goodwill of the firm is valued at ₹1,50,000.

Here,
Necessary journal entries in the books of the firm are

Dt.

2013

Particulars L.F. Dr. ₹ Cr. ₹
Apr 1 Bank A/c Dr. 2,00,000
To P’s Capital 2,00,000
(Being the amount of capital brought in by P in the firm)
Apr 1 P’s Capital

(₹1,50,000 x 1/3)

Dr. 50,000
To M’s Capital 30,000
To N’s Capital 20,000
(Being the capital accounts of M and N credited in their sacrificing ratio, i.e, 3:2 for P’s share of goodwill on his admission)

Q.10 Explain various methods for the treatment of goodwill on the admission of a new partner?

Ans. Goodwill can be treated in two ways:

  • By Premium Method and By Revaluation Method.

Premium Method:

This method is used when new partner brings his share of goodwill in cash, which is shared by the old partners in sacrificing ratio. There may be different situations when this method may be used, shown below:

Situation 1: When goodwill is paid privately.

In this situation goodwill is not recorded in the books of accounts. i.e., no journal entry is passed.

Situation 2: When goodwill is brought in cash by the new partner and retained in the business. Following are the journal entries required to record the fact.

On bringing Goodwill in Cash
Dt. Particulars L.F. Dr. ₹ Cr. ₹
Cash/Bank A/c Dr.
To Premium for goodwill A/c
(Goodwill brought in cash by the new partner)
For sharing premium for goodwill by sacrificing partners
Premium for goodwill A/c Dr.
To Partners’ Capital/Current a/c
(Individually)
(Goodwill credited to sacrificing partners in sacrificing ratio)
For withdrawal of the amount of premium
Partners Capital/Current Dr.
To Cash/Bank A/c
(old partners individually)
(Amount of goodwill withdrawn by the partners)

Revaluation Method:

This method is followed, when the new partner is unable to bring his share of goodwill in cash. The following journal entries are passed.

New Partner’s Capital A/c Dr.
To old partners’ Capital A/c
(individually)
(New partner’s share of goodwill distributed among old partners in sacrificing ratio)

Q.11 How will you deal with the accumulated profits and losses and reserves on the admission of a new partner?

Ans. Accumulated profits and losses and reserve on the admission of a new partner may exist because these might have not yet transferred to capital accounts of the partners. These belong to old partners and the new partner is not entitled to have any share in such accumulated profits/losses, reserve.

Hence these are distributed among old partner by transferring them to their capital accounts in old profit sharing ratio. Following are the journal entries for the same.

For Distribution of reserve among the partners
Dt. L.F. Dr. Cr.
Reserve A/c Dr.
To Partners’ Capital/Current a/c
(Individually)
(Amount of reserve distributed among old partners in the old ratio)
For Distribution of credit balance in P& L among the partners
Dt. L.F. Dr. Cr.
P & L A/c Dr.
To Partners’ Capital/Current a/c
(Individually)
(Amount of accumulated profits distributed among old partners in the old ratio)
For debit balance in P& L
Dt. L.F. Dr. Cr.
Partners’ Capital/Current a/c Dr.
To P & L A/c
(Losses debited to old partners in the old ratio)

Let us understand it with the help of example; Sam and Dev are partners in a firm sharing profits in the ratio of 11:5 admit Stu as a new partner for ¼ share in the profits. On the date of admission there was a debit balance of ₹80,000 in the profit and loss account.

The necessary journal entries for the treatment of Profit and Loss account balance on Stu’s admission:

Dt. Particulars L.F. Dr. ₹ Cr. ₹
Sam’s Capital Dr. 55,000
Dev’s Capital Dr. 25,000
To Profit & Loss 80,000
(Accumulated loss transferred to Sam and Div capital accounts on Stu’s admission)

 

 

Q.12 At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been due. Show with the help of an imaginary balance sheet.

Ans. The assets and liabilities after revaluation will appear at new figures as in the given example:

A and G were carrying on business in partnership sharing profits in the ratio of 2:1. Their Balance Sheet as on March 31, 2018 stood as follows:

Liabilities Assets
Capitals: Cash in hand 5,000
A 30,000 Cash at Bank 5,000
G 36,000 66,000 Sundry Debtors 12,000
Sundry Creditors 10,000 Stock 8,000
Bills Payable 3,600 Plant & Machinery 20,000
Rent Outstanding 400 Building 30,000
80,000 80,000

S is admitted as a partner on the date of the Balance sheet on the following terms:

  1. She will bring in ₹20,000 as her capital and ₹12,000 as her share of goodwill for ¼ share in profits.
  2. Plant is to be appreciated to ₹24,000 and the value of building is to be appreciated by 10%.
  3. Stock is found over valued by ₹800.
  4. A provision for doubtful debt is to maintain ₹600.
  5. Creditors were unrecorded to the extent of ₹200.

In this case the journal entries are:

Dt. Particulars L.F. Dr. ₹ Cr. ₹
Cash A/c Dr. 32,000
To S’s Capital 20,000
To Premium 12,000
(Cash brought in by S for her capital and share of goodwill)
Premium A/c Dr. 12,000
To Premium A/c 8,000
To A’s Capital 4,000
To G’s Capital
(Premium brought in by S transferred to A and G Capital in the sacrificing ratio)
Revaluation A/c Dr. 1,400
To Stock A/c 800
To Provision for bad & doubtful debts 600
(Stock depreciated and provision for bad and doubtful debts created on sundry debtors)
Revaluation A/c Dr. 200
To Creditors 200
(Increase in the value of creditors)
Plant & Machinery A/c Dr. 4,000
Building A/c Dr. 3,000
To Revaluation A/c 7,000
(Increase in the value of assets on revaluaton)
Revaluation A/c Dr. 5,400
To A’s Capital 3,600
To G’s Capital 1,800
(Transfer of gain on revaluation to A and G Capital in old ratio)
Revaluation Account
Particulars Particulars
To Stock 800 By Plant & Machinery 4,000
Provision for bad & doubtful debts 600 Building 3,000
Creditors 200
Profit on Revaluation
Trfd. To Capitals
A 3,600
G 1,800 5,400
7,000 7,000
Partner’s Capital A/c (₹ in ‘00’ (hundreds)
Dt. Particulars L.f. A

G

S

Dt. Particulars L.f. A

G

S

To Bal. c/d 416 418 200 By Bal. b/d 300 360
Cash 200
Premium 80 40
Profit on Revaluation 36 18
416 418 200 416 418 200
Bal. b/d 416 418 200
Balance Sheet as at 31st March 2018
Liabilities Assets
Capitals: Cash in hand 37,000
A 41,600 Cash at Bank 5,000
G 41,800 Sundry Debtors 12000
S 20,000 1,03,000 Less:
Sundry Creditors 10,200 Provision 600 11,400
Bills Payable 3,600 Stock 7,200
Rent Outstanding 400 Plant & Machinery 24,000
Building 33,000
1,17,600 1,17,600

Q.13 Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3, They admitted Ghosh as a new partner for 1/5 share of profits. Ghosh is to bring in ₹20,000 as capital and ₹4,000 as his share of goodwill premium. Give the necessary journal entries:

1. When the amount of goodwill is retained in the business.
2. When the amount of goodwill is fully withdrawn.
3. When 50% of the amount of goodwill is withdrawn.
4. When goodwill is paid privately.

Ans. Case (a)

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 24,000
To Ghosh’s Capital A/c 20,000
To Premium for goodwill A/c 4,000
(Being capital and goodwill brought by Ghosh)
ii Premium for goodwill A/c Dr. 4,000
To Verma’s Capital A/c 2,500
To Sharma’s Capital A/c 1,500
(Being goodwill distributed in sacrificing ratio)

Case (b)

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 24,000
To Ghosh’s Capital A/c 20,000
To Premium for goodwill A/c 4,000
(Being capital and goodwill brought by Ghosh)
ii Premium for goodwill A/c Dr. 4,000
To Verma’s Capital A/c 2,500
To Sharma’s Capital A/c 1,500
(Being goodwill distributed in sacrificing ratio)
iii Verma’s Capital A/c Dr. 2,500
Sharma’s Capital A/c Dr. 1,500
To Cash A/c 4,000
(Being amount of goodwill withdrawn)

Case (c)

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 24,000
To Ghosh’s Capital A/c 20,000
To Premium for goodwill A/c 4,000
(Being capital and goodwill brought by Ghosh)
ii Premium for goodwill A/c Dr. 4,000
To Verma’s Capital A/c 2,500
To Sharma’s Capital A/c 1,500
(Being goodwill distributed in sacrificing ratio)
iii Verma’s Capital A/c Dr. 1,250
Sharma’s Capital A/c Dr. 750
To Cash A/c 2,000
(Being half amount of goodwill withdrawn)

Case (d)

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 20,000
To Ghosh’s Capital A/c 20,000
(Being capital brought by Ghosh)

No entry for goodwill will be passed in this case, as the amount of goodwill is paid outside the business i.e. privately.

Q.14 X and Y are partners in a firm sharing profits and losses in 4:3 ratio. They admitted Z for 1/8 share. Z brought ₹20,000 for his capital and ₹7,000 for his 1/8 share of goodwill. Goodwill already appears in the books at Rs. 40,000. Show necessary journal entries in the books of X, Y and Z.

Ans.

Particulars Dr. (₹) Cr. (₹)
1 X’s Capital A/c Dr. 22,857
Y’s Capital A/c Dr. 17,143
To Goodwill A/c 40,000
(Being goodwill in the books of account written off in the old ratio)
2 Cash A/c Dr. 27,000
To Z’s Capital A/c 20,000
To Premium for goodwill A/c 7,000
(Being capital and goodwill brought by Z)
3 Premium for goodwill A/c Dr. 7,000
To X’s Capital A/c 4,000
To Y’s Capital A/c 3,000
(Being goodwill distributed in sacrificing ratio)

Q.15 Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They admitted Kanwar for ¼ share of profits. Kanwar could not bring his share of goodwill premium in cash. The goodwill of the firm was valued at ₹80,000 on Kanwar’s admission.

Record necessary journal entry for goodwill on Kanwar’s admission.

Ans.

Particulars Dr. (₹) Cr. (₹)
i Kanwar’s Capital A/c Dr. 20,000
To Amar’s Capital A/c 15,000
To Sarmar’s Capital A/c 5,000
(Being goodwill distributed in sacrificing ratio)

Kanwar’s share of goodwill = ₹80,000 x ¼ = ₹20,000.

In this case old ratio itself will be considered as the sacrificing ratio.

Q.16 Give below is the Balance Sheet of A and B, who are carrying on partnership business on 31/12/2016. A and B share profits and losses in the ratio of 2:1.

Balance Sheet of A and B as on 31st Dec, 2016
Liabilities Assets
Bills Payable 10,000 Cash in Hand 10,000
Creditors 58,000 Cash at Bank 40,000
Outstanding Expenses 2,000 Sundry Debtors 60,000
Capital: Stock 40,000
A 1,80,000 Plant 1,00,000
B 1,50,000 3,30,000 Buildings 1,50,000
4,00,000 4,00,000

C is admitted as a partner on the balance sheet on the following terms:

1. C will bring in ₹1,00,000 as his capital and ₹60,000 as his share of goodwill for ¼ share in the profits.
2. Plant is to be appreciated to ₹1,20,000 and the value of buildings is to be appreciated by 10%.
3. Stock is found, over valued by ₹4,000.
4. A provision for bad and doubtful debts is to be created at 5% of debtors.
5. Creditors were unrecorded to the extent of ₹1,000.

Pass the necessary journal entries, prepare the revaluation account and partners capital accounts and show the Balance Sheet after the admission of C.

Ans. Revaluation A/c

Particulars Particulars
To Stock 4,000 By Plant 20,000
To Sundry debtors 3,000 By Building 15,000
To Creditors 1,000
To Profit t/f to
capitals
A 18,000
B 9,000 27,000
35,000 35,000

Partners’ Capital Accounts

Particulars ₹ A ₹ B Particulars ₹ A ₹ B
To balance c/d 2,38,000 1,79,000 By balance b/d 1,80,000 1,50,000
By revaluation
Profit 18,000 9,000
By premium 40,000 20,000
2,38,000 1,79,000 2,38,000 1,79,000

C’s Capital Account

Particulars Particulars
To balance c/d 1,00,000 By cash a/c 1,00,000
1,00,000 1,00,000

Balance Sheet

as on 1st Jan 2017

Liabilities Assets
Bills payable 10,000 Cash in hand 10,000
Creditors 59,000 Cash at bank 2,00,000
O/s expenses 2,000 S. debtors 60,000
Capitals (-) Provision 3,000 57,000
A 2,38,000 Stock 36,000
B 1,79,000 Plant 1,20,000
C 1,00,000 5,17,000 Buildings 1,65,000
5,88,000 5,88,000

Journal Entries

Particulars Dr. (₹) Cr. (₹)
2016 Plant A/c Dr. 20,000
Dec Building A/c Dr. 15,000
31 To Revaluation A/c 35,000
(Being increase in the value of plant and building)
Revaluation A/c Dr. 8,000
To stock 4,000
To s. debtors 3,000
To creditors 1,000
(Being decrease in the value of assets debited to revaluation)
Revaluation A/c Dr. 27,000
To A’s Capital A/c 18,000
To B’s Capital A/c 9,000
(Being profit on revaluation distributed among old partners)
Cash A/c Dr. 1,60,000
To C’s Capital A/c 1,00,000
To Premium for goodwill A/c 60,000
(Being capital and goodwill brought by C)
Premium for goodwill A/c Dr. 60,000
To A’s Capital A/c 40,000
To B’s Capital A/c 20,000
(Being goodwill distributed in sacrificing ratio)

Q.17 Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5:3. On 1st April, 2017 they admitted Om as a new partner. On the date of Om’s admission the balance sheet of Leela and Meeta showed a balance of ₹16,000 in general reserve and ₹24,000 (Cr) in Profit and Loss account. Record necessary journal entries for the treatment of these items on Om’s admission.

The new profit sharing ratio between Leela, Meeta and Om was 5:3:2.

Ans. Journal Entries

Particulars Dr. (₹) Cr. (₹)
2017 General reserve Dr. 16,000
April To Leela’s Capital A/c 10,000
01 To Meeta’s Capital A/c 6,000
(Being general reserve distributed among old partners in old ratio)
Profit and loss A/c Dr. 24,000
To Leela’s Capital A/c 15,000
To Meeta’s Capital A/c 9,000
(Being balance in P&L distributed among old partners in old ratio)

Q.18 Amit and Viney are partners in a firm sharing profits and losses in 3:1 ratio. On 01/01/2017 they admitted Ranjan as a partner. On Ranjan’s admission the profit and loss account of Amit and Viney showed a debit balance of ₹40,000.

Record necessary journal entry for the treatment of the same.

Ans. Journal Entries

Particulars Dr. (₹) Cr. (₹)
2017 Amit’s Capital A/c Dr. 30,000
Jan 01 Vinay’s Capital A/c Dr. 10,000
To Profit and loss A/c 40,000
(Being debit balance in P&L debited to old partners in old ratio)

Q.19 A and B share profits in the proportion of ¾ and ¼. Their Balance Sheet on March. 31, 2016 was as follows:

Balance Sheet of A and B as at March 31 2016
Liabilities Assets
Sundry Creditors 41,500 Cash at Bank 26,500
Reserve fund 4,000 Bills Receivable 3,000
Capital: Debtors 16,000
A 30,000 Stock 20,000
B 16,000 Fixtures 1,000
Land & Building 25,000
91,500 91,500

On 1st January, 2017, C was admitted into partnership on the following terms:

  1. That C pays ₹10,000 as his capital.
  2. That C pays ₹5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
  3. That stock and fixtures be reduced by 10% and a 5%, provision for doubtful debts be created on Sundry Debtors and Bills Receivable.
  4. That the value of land and buildings be appreciated by 20%.
  5. There being a claim against the firm for damages, a liability to the extent of ₹1,000 should be created.
  6. An item of ₹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.

Ans. Journal Entries

Particulars Dr. (₹) Cr. (₹)
2017 Reserve fund Dr. 4,000
Jan 01 To A’s Capital A/c 3,000
To B’s Capital A/c 1,000
(Being reserve fund distributed among old partners in old ratio)
Land and building A/c Dr. 5,000
Sundry creditors A/c Dr. 650
To Revaluation A/c 5,650
(Being increase in the value of building and decrease in creditors)
Revaluation A/c Dr. 4,050
To stock 2,000
To s. debtors 800
To fixtures 100
To bills receivable 150
To liability for damages 1,000
(Being decrease in the value of assets and increase in liabilities)
Revaluation A/c Dr. 1,600
To A’s Capital A/c 1,200
To B’s Capital A/c 400
(Being profit on revaluation distributed among old partners)
Bank A/c Dr. 15,000
To C’s Capital A/c 10,000
To Premium for goodwill A/c 5,000
(Being capital and goodwill brought by C)
Premium for goodwill A/c Dr. 5,000
To A’s Capital A/c 3,750
To B’s Capital A/c 1,250
(Being goodwill distributed in sacrificing ratio)
A’s Capital A/c Dr. 1,875
B’s Capital A/c Dr. 625
To Bank A/c 2,500
(Being half the amount of goodwill withdrawn)

Revaluation A/c

Particulars Particulars
To stock 2,000 By Building 5,000
To s. debtors 800 By s. creditors 650
To fixtures 100
To bills receivable 150
To liab. damages 1,000
To profit t/f to
capitals
A 1,200
B 400 1,600
5,650 5,650

Partners’ Capital Accounts

Particulars ₹ A ₹ B Particulars ₹ A ₹ B
To cash 1,875 625 By balance b/d 30,000 16,000
To balance c/d 36,075 18,025 By revaluation
Profit 1,200 400
By premium 3,750 1,250
By res. fund 3,000 1,000
37,950 18,650 37,950 18,650

C’s Capital Account

Particulars Particulars
To Balance c/d 10,000 By Bank a/c 10,000
10,000 10,000

Balance Sheet

as on 1st Jan 2017

Liabilities Assets
S. Creditors 40,850 Cash at bank 39,000
Liability for 1,000 Bills receivable 2,850
damages S. debtors 16,000
Capitals (-) Provision 800 15,200
A 36,075 Stock 18,000
B 18,025 Fixtures 900
C 10,000 64,100 Land & buildings 30,000
1,05,950 1,05,950

Q.20 The following was the balance sheet of Arun, Bablu and Chetan profits and losses in the ratio of 6/14:5/14:3/14 respectively.

Liabilities Assets
Creditors 9,000 Land & Building 24,000
Bills Payable 3,000 Furniture 3,500
Capital Stock 14,000
Arun 19,000 Debtors 12,600
Bablu 16,000 Cash 900
Chetan 8,000 43,000
55,000 55,000

They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms:

a) that Deepak should bring in ₹4,200 as goodwill and ₹7,000 as his capital;

b) that furniture be depreciated by 12%;

c) that stock can be depreciated by 10%;

d) that a reserve of 5% be created for doubtful debts;

e) that the value of land and buildings having appreciated be brought up to ₹31,000;

f) that after making the adjustments the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by the old partners as the case may be.

Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation Account) and the Opening Balance sheet of the new firm.

Ans. Revaluation A/c

Particulars Particulars
To stock 1,400 By land
To res. for b/d 630 and building 7,000
To furniture 420
To profit t/f to
capitals
Arun 1,950
Bablu 1,625
Chetan 975 4,550
7,000 7,000

Partners’ Capital Accounts

Particulars Arun Bablu Particulars Arun Bablu
To cash 1,750 1,625 By balance b/d 19,000 16,000
(Bal. figure) By revaluation
To balance c/d 21,000 17,500 Profit 1,950 1,625
By premium 1,800 1,500
22,750 19,125 22,750 19,125

Partners’ Capital Accounts

Particulars Chetan Deepak Particulars Chetan Deepak
By bal. b/d 8,000
To balance c/d 10,500 7,000 By cash 7,000
By revaluation
Profit 975
By premium 900
By cash (B.F.) 625
10,500 7,000 10,500 7,000

Cash A/c

Particulars Particulars
To balance b/d 900 By Arun’s cap. 1,750
To Deepak’s cap. 7,000 By Bablu’s cap. 1,625
To Premium 4,200 By balance c/d 9,350
To Chetan’s cap. 625
12,725 12,725

Balance Sheet

as on …..

Liabilities Assets
Creditors 9,000 Cash in hand 9,350
Bills payable 3,000 Stock 12,600
Capitals S. debtors 12,600
Arun 21,000 (-) Provision 630 11,970
Bablu 17,500 Furniture 3,080
Chetan 10,500 Land & buildings 31,000
Deepak 7,000 56,000
68,000 68,000

Q.21 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 ¼ share in profits. Chintan will bring in ₹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 December 31, 2016 (before Chintan’s admission) was as follows:

Balance Sheet of A and B as on 31/12/2016
Liabilities Assets
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: Stock 10,000
Azad 50,000 Furniture 5,000
Babli 32,000 82,000 Machinery 25,000
Buildings 40,000
1,00,000 1,00,000

It was agreed that:

  1. Chintan will bring in ₹12,000 as his share of goodwill premium.
  2. Buildings were valued at ₹45,000 and Machinery at ₹23,000.
  3. A provision for doubtful debts is to be created @ 6% on debtors.
  4. The capital accounts of Azad and Babli are to be adjusted by opening current accounts.

Record necessary journal entries, show necessary ledger account at prepare the Balance Sheet after admission.

Ans. Journal Entries

Particulars Dr. (₹) Cr. (₹)
2016 General reserve Dr. 6,000
31 Dec. To Azad’s Capital A/c 4,000
To Babli’s Capital A/c 2,000
(Being general reserve distributed among old partners in old ratio)
Building A/c Dr. 5,000
To Revaluation A/c 5,000
(Being increase in the value of building)
Revaluation A/c Dr. 2,480
To machinery 2,000
To pro. for D/D 480
(Being decrease in the value of assets)
Revaluation A/c Dr. 2,520
To Azad’s Capital A/c 1,680
To Babli’s Capital A/c 840
(Being profit on revaluation distributed among old partners)
Bank A/c Dr. 42,000
To Chintan’s Capital A/c 30,000
To Premium for goodwill A/c 12,000
(Being capital and goodwill brought by Chintan)
Premium for goodwill A/c Dr. 12,000
To Azad’s Capital A/c 8,000
To Babli’s Capital A/c 4,000
(Being goodwill distributed in sacrificing ratio)
Azad’s Capital A/c Dr. 3,680
To Azad’s Current A/c 3,680
(Being excess of capital transferred to current account)
Babli’s’s Capital A/c Dr. 8,840
To Babli’s Current A/c 8,840
(Being excess of capital transferred to current account)

Revaluation A/c

Particulars Particulars
To machinery 2,000 By Building 5,000
To provision for
doubtful debts 480
To profit t/f to
capitals
Azad 1,680
Babli 840 2,520
5,000 5,000

Partners’ Capital Accounts

Particulars Azad Babli Particulars Azad Babli
To current a/c 3,680 8,840 By balance b/d 50,000 32,000
(Bal. figure) By revaluation
To balance c/d 60,000 30,000 Profit 1,680 840
By premium 8,000 4,000
By general res. 4,000 2,000
63,680 38,840 63,680 38,840

Chintan’s Capital Account

Particulars Particulars
To balance c/d 30,000 By Bank a/c 30,000
30,000 30,000

Balance Sheet

as on 1st Jan 2017

Liabilities Assets
Creditors 8,000 Cash at bank 54,000
Bills payable 4,000 Stock 10,000
Current Accounts S. debtors 8,000
Azad 3,680 (-) Provision 840 7,520
Babli 8,840 12,520 Furniture 5,000
Capitals Building 45,000
Azad 60,000 Machinery 23,000
Babli 30,000
Chintan 30,000 1,20,000
1,44,520 1,44,520

Q.22 Ashish and Dutta were partners in a firm sharing profits in 3:2 ratio. On April 01, 2016 they admitted Vimal for 1/5 share in the profits. The Balance Sheet Ashish and Dutta as on March 31, 2016 was as follows:

Balance Sheet of A and B as on 31/03/2016
Liabilities Assets
Creditors 15,000 Land & Building 35,000
Bills Payable 10,000 Plant 45,000
Capital: Debtors 22,000
Ashish 80,000 Less:
Dutta 35,000 Provision 2,000 20,000
Stock 35,000
Cash 5,000
1,40,000 1,40,000

It was agreed that:

1. The value of Land & Building be increased by ₹ 15,000.
2. The value of plant be increased by ₹ 10,000.
3. Goodwill of the firm be valued at ₹ 20,000.
4. Vimal to bring in capital to the extent of 1/5th of the capital of the new firm.

Record the necessary journal entries and prepare the Balance Sheet of the firm after Vimal’s admission.

Ans. Journal Entries

Particulars Dr. (₹) Cr. (₹)
2016 Land and building A/c Dr. 15,000
Apr Plant A/c Dr. 10,000
1 To Revaluation A/c 25,000
(Being increase in the value of building and plant)
ii Revaluation A/c Dr. 25,000
To Ashish’s Capital A/c 15,000
To Dutta’s Capital A/c 10,000
(Being profit on revaluation distributed among old partners)
iii Cash A/c Dr. 36,000
To Vimal’s Capital A/c 36,000
(Being 1/5th capital brought by Vimal)
iv Vimal’s Current A/c Dr. 4,000
To Ashish’s Capital A/c 2,400
To Dutta’s Capital A/c 1,600
(Being goodwill distributed in sacrificing ratio)

Balance Sheet (after admission)

Liabilities Assets
Creditors 15,000 Cash 41,000
Bills payable 10,000 Stock 35,000
Capitals S. Debrs. 22,000
Ashish 97,400 (-) Pro. 2000 20,000
Dutta 46,600 Plant 55,000
Vimal 36,000 1,80,000 Land & building 50,000
Vimal’s current a/c 4,000
2,05,000 2,05,000

Working Note:

Partners’ Capital Accounts

Particulars Ashish ₹ Dutta ₹ Vimal ₹ Particulars Ashish ₹ Dutta ₹ Vimal ₹
To Balance c/d 97,400 46,600 36,000 By Balanceb/d 80,000 35,000
By Revaluation 15,000 10,000
By Cash 36,000
By Vimal Current 2,400 1,600
97,400 46,600 36,000 97,400 46,600 36,000

Vimal Current Account

Particulars Particulars
To Ashish’s Capital A/c 2,400 By Balance c/d 4,000
To Dutta’s Capital A/c 1,600
4,000 4,000

Total adjusted capital of old partners = ₹97,400 + ₹46,600 = ₹ 1,44,000

4/5th capital = ₹1,44,000

Total capital = ₹1,44,000 × 5/4 = ₹1,80,000

Vimal’s share = ₹1,80,000 × 1/5 = ₹36,000

Q.23 If it is agreed that the capital of all the partners should be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

Ans. Sometime, at the time of admission, the partners agree that their capitals should also be adjusted so as to be proportionate to their profit sharing ratio.

In such a situation, if the capital of the new partner is given, the same can be used as a base for calculating the new capitals of the old partners. The capitals thus ascertained should be compared with their old capitals after all adjustments relating to goodwill reserves and revaluation of assets and liabilities, etc. have been made and then the partner whose capital falls short, will bring in the necessary amount to cover the shortage and the partner who has a surplus, will withdraw the excess amount of capital.

Let’s take an example for better understanding:

P and Q are partners sharing profits in the ratio of 2:1. R is admitted into the firm for ¼ share of profits. R brings in ₹20,000 in respect of his capital. The capitals of old partners P and Q, after all adjustments relating to goodwill, revaluation of assets and liabilities, etc are ₹45,000 and ₹15,000 respectively. It is agreed that partner’s capitals should be according to the new profit sharing ratio.

Let us determine the new capitals of P and Q and record the necessary journal entries assuming that the partner whose capital falls short, brings in the amount of deficiency and the partner who has an excess, withdraws the excess amount.

Here,

Calculation of new profit sharing ratio. Assuming the new partner R acquires his share from P and Q in their old profit sharing ratio, i.e., 2:1.

Total share = 1 R’s Share = 1 4 Remaining shares = 1- 1 4 = 3 4 P’s New Share = 3 4 x 2 3 = 6 12 Q’s New Share = 3 4 x 1 3 = 3 12 R’s New Share = 1 4 x 3 3 = 3 12 Thus new profit sharing ratio between P, Q and R: = 6:3:3 or 2:1:1 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@E4EC@

Required capital of P and Q, R’s Capital (who has ¼ share in profits) is ₹20,000. P’s new share is 2/4 which is double of R’s share. Hence the capital will be ₹40,000.

Alternatively based on R’s Capital the total capital of the firm works out at ₹80,000. Hence based on their share in profits, the capital of P and Q will be:

Ps Capital = 2 4 of 80,000 = 40,000 Qs Capital = 1 4 of 80,000 = 20,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@77AF@

The capital of P and Q after all adjustments have been made, are ₹45,000 and ₹15,000 respectively. Hence P will withdraw ₹5,000 (₹45,000 – ₹40,000) from the firm where Q will contribute additional amount of ₹5,000 (₹20,000 – ₹15,000).

The journal entries will be:

Dt. Particulars L.F. Dr. ₹ Cr. ₹
P’s Capital Dr. 5,000
To Cash 5,000
(Excess capital withdrawn by P)
Cash A/c Dr. 5,000
To Q’s Capital 5,000
(Deficiency made good by additional amount brought in by Q)

Sometimes, the total capital of the firm may clearly specified and it is agreed that the capital of each partner should be proportionate to his share in profits. In such a situation each partner’s capital (including the new partner’s capital to be brought by him) is calculated on the basis of new capital.

Q.24 Explain various methods of valuation of goodwill.

Ans. The methods for valuing goodwill are:

  • Average profit method.
  • Super Profit method.
  • Capitalisation method.

(1) Average Profit Method:
Goodwill under Average profit method can be calculated using Simple Average Profit Method or Weighted Average Profit Method.
Simple Average Profit Method: Under the Simple Average Profit Method, average profits earned by the business for the specified number of years are considered. Profits earned are totaled and average is determined. Average profit as calculated is multiplied by a number of year’s purchase to arrive at the value of goodwill.

Calculate Average profit as follows:

Calculate Average profit as follows: Average profit = Total profits Number of years Calculate goodwill applying the formula: Goodwill = Average profit x No. of years purchase MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@D33D@

Weighted Average method: Under this method, each year’s profit is multiplied by the number of assigned weights and the value is ascertained. The products are added and divided by the total of weights to arrive at the average profit. The weighted average profit so arrived at are multiplied by the agreed ‘Number of years’ ‘Purchase’ to arrive at the value of goodwill.

Calculate Weighted Average profit as follows:

Calculate Weighted Average profit as follows: Weighted Average profit = Total purchase of profits Total of weights Goodwill = Weighted Average profit x Agreed No. of years purchase MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@D8CA@

(2) Super Profit Method:
The excess of actual profit over the normal profit is called super profit. Goodwill under this method is calculated by multiplying the super profits with the agreed number of years purchase. Normal rate of return is considered while calculating the super profit. Average capital employed is taken into account while calculating the super profit.

Calculating goodwill under this method: Calculate Average Capital Employed as: = Opening Capital Employed + Closing Capital Employed 2 Capital Employed = Capital + Free Reserves – Fictitious Assets (if any) Or All assets (other than goodwill, fictitious assets & non-trade investments) – Outsider’s Liabilities. Calculate actual expected profits, i.e., average profit. Calculate normal profit on avearge capital employed by applying : Average Capital Employed x Normal Rate of Return 100 Calculate Super Profit, i.e., Actual – Normal (Profit) Calculate value of goodwill as follows: Goodwill = Super Profit x Number of Year’s Purchase MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@5BBF@

(3) Capitalisation Method:
Under this method, Goodwill can be valued in two ways:

Capitalisation of Average Profit: Under this, goodwill is calculated by deducting capital employed (net assets as on the date of valuation) in the business from the capitalised value of average profit on the basis of normal rate of return.

Capitalised value of the business is ascertained as follows:

= Average profit x 100 Normal rate of Return (Profit) MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGcbaGaaeypaiaabccadaWcaaqaaiaabgeacaqG2bGaaeyzaiaabkhacaqGHbGaae4zaiaabwgacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaabIhacaqGGaGaaeymaiaabcdacaqGWaaabaGaaeOtaiaab+gacaqGYbGaaeyBaiaabggacaqGSbGaaeiiaiaabkhacaqGHbGaaeiDaiaabwgacaqGGaGaae4BaiaabAgacaqGGaGaaeOuaiaabwgacaqG0bGaaeyDaiaabkhacaqGUbGaaeiiaiaabIcacaqGqbGaaeOCaiaab+gacaqGMbGaaeyAaiaabshacaqGPaaaaaaa@69A4@

For calculating goodwill under this method, the steps are:

Calculate average normal profit earned.

Calculate capitalised value of the firm by using the above formula.

Net Assets = All assets (other than goodwill, fictitious assets and non-trade investments at their current values) – outsiders liabilities.

Goodwill = Capitalised value – Net assets.

Capitalisation of Super Profit: Under this method, goodwill is calculated by capitalisation of super profit.

For calculating goodwill under this method, the steps are: Calculate Capital Employed (Net assets as on date of valuation of firm) Calculate Normal Profit on capital employed by using the following formula: Normal profit = Capital employed x Required rate of return 100 Calculate Average profit of past years, i.e 3 to 5 years Calculate Super Profit, i.e., Actual Average profit – Normal Profit Goodwill = Super profit x 100 Normal rate of return MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@BACF@

Q.25 A and B were partners in a firm sharing profits and losses in the ratio of 3:2. They admit C into the partnership with 1/6 share in the profits. Calculate the new profit sharing ratio?

Ans.

MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGmbGaaeyzaiaabshacaqGGaGaaeiDaiaab+gacaqG0bGaaeyyaiaabYgacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabwgacaqGGaGaaeypaiaabccacaqGXaaabaGaae4qaiaabEcacaqGZbGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab2dadaWcaaqaaiaabgdaaeaacaqG2aaaaaqaaiaabkfacaqGLbGaaeyBaiaabggacaqGPbGaaeOBaiaabMgacaqGUbGaae4zaiaabccacaqGZbGaaeiAaiaabggacaqGYbGaaeyzaiaabccacaqGVbGaaeOzaiaabccacaqGbbGaaeiiaiaabggacaqGUbGaaeizaiaabccacaqGcbGaaeiiaiaab2dacaqGGaGaaeymaiaab2cadaWcaaqaaiaabgdaaeaacaqG2aaaaiaabccacaqG9aGaaeiiamaalaaabaGaaeynaaqaaiaabAdaaaaabaGaaeiuaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaae4laiaabYgacaqGVbGaae4CaiaabohacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabMgacaqGUbGaae4zaiaabccacaqGYbGaaeyyaiaabshacaqGPbGaae4BaiaabccacaqGVbGaaeOzaiaabccacaqGbbGaaeiiaiaabggacaqGUbGaaeizaiaabccacaqGcbGaaeiiaiaab2dacaqGGaGaae4maiaabQdacaqGYaaabaGaaeOtaiaabwgacaqG3bGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab+gacaqGMbGaaeiiaiaabgeacaqGGaGaaeypaiaabccadaWcaaqaaiaabwdaaeaacaqG2aaaaiaabccacaqG4bGaaeiiamaalaaabaGaae4maaqaaiaabwdaaaGaaeiiaiaab2dacaqGGaWaaSaaaeaacaqGXaGaaeynaaqaaiaabodacaqGWaaaaaqaaiaab6eacaqGLbGaae4DaiaabccacaqGZbGaaeiAaiaabggacaqGYbGaaeyzaiaabccacaqGVbGaaeOzaiaabccacaqGcbGaaeiiaiaab2dacaqGGaWaaSaaaeaacaqG1aaabaGaaeOnaaaacaqGGaGaaeiEaiaabccadaWcaaqaaiaabkdaaeaacaqG1aaaaiaabccacaqG9aGaaeiiamaalaaabaGaaeymaiaabcdaaeaacaqGZaGaaeimaaaaaeaacaqGobGaaeyzaiaabEhacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGPbGaaeOBaiaabEgacaqGGaGaaeOCaiaabggacaqG0bGaaeyAaiaab+gacaqGGaGaae4BaiaabAgacaqGGaGaaeyqaiaabYcacaqGGaGaaeOqaiaabccacaqGHbGaaeOBaiaabsgacaqGGaGaae4qaiaabQdaaeaacaqG9aGaaeiiamaalaaabaGaaeymaiaabwdaaeaacaqGZaGaaeimaaaacaqG6aWaaSaaaeaacaqGXaGaaeimaaqaaiaabodacaqGWaaaaiaabQdadaWcaaqaaiaabgdaaeaacaqG2aaaaaqaaiaab2dacaqGGaWaaSaaaeaacaqGXaGaaeynaaqaaiaabodacaqGWaaaaiaabQdadaWcaaqaaiaabgdacaqGWaaabaGaae4maiaabcdaaaGaaeOoamaalaaabaGaaeynaaqaaiaabodacaqGWaaaaaqaaiaab2dacaqGGaGaae4maiaabQdacaqGYaGaaeOoaiaabgdaaaaa@04B0@

Q.26 A, B, C were partners in a firm sharing profits in 3:2:1 ratio. They admitted D for 10% profits. Calculate the new profit sharing ratio.

Ans. 

Let the total share = 1 D’s Share = 1 10 Remaining share of A, B and C 1 – 1 10 = 9 10 New share A = 9 10 x 3 6 = 27 60 B = 9 10 x 2 6 = 18 60 C = 9 10 x 1 6 = 9 60 New share = old share – sacrifice Hence new profit sharing ratio of A, B, C and D = 27 60 : 18 60 : 9 60 : 1 10 = 27 60 : 18 60 : 9 60 : 6 60 = 9:6:3:2 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@1370@

Q.27 X and Y are partners sharing profits in 5:3 ratio admitted Z for 1/10 share which he acquired equally from X and Y. Calculate new profit sharing ratio.

Ans.

First calculating the sacrifice: Z’s Share = 1 10 Acquired from X = 1 10 x 1 2 = 1 20 Acquired from Y = 1 10 x 1 2 = 1 20 New share = old share – sacrifice New share = X = 5 8 1 20 = 23 40 Y = 3 8 1 20 = 13 40 Hence new profit sharing ratio of X, Y and Z = 23 40 : 13 40 : 1 10 = 23:13:4 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGgbGaaeyAaiaabkhacaqGZbGaaeiDaiaabccacaqGJbGaaeyyaiaabYgacaqGJbGaaeyDaiaabYgacaqGHbGaaeiDaiaabMgacaqGUbGaae4zaiaabccacaqG0bGaaeiAaiaabwgacaqGGaGaae4CaiaabggacaqGJbGaaeOCaiaabMgacaqGMbGaaeyAaiaabogacaqGLbGaaeOoaaqaaiaabQfacaqGNaGaae4CaiaabccacaqGtbGaaeiAaiaabggacaqGYbGaaeyzaiaabccacaqG9aWaaSaaaeaacaqGXaaabaGaaeymaiaabcdaaaaabaGaaeyqaiaabogacaqGXbGaaeyDaiaabMgacaqGYbGaaeyzaiaabsgacaqGGaGaaeOzaiaabkhacaqGVbGaaeyBaiaabccacaqGybGaaeiiaiaab2dacaqGGaWaaSaaaeaacaqGXaaabaGaaeymaiaabcdaaaGaaeiEamaalaaabaGaaeymaaqaaiaabkdaaaGaaeypamaalaaabaGaaeymaaqaaiaabkdacaqGWaaaaaqaaiaabgeacaqGJbGaaeyCaiaabwhacaqGPbGaaeOCaiaabwgacaqGKbGaaeiiaiaabAgacaqGYbGaae4Baiaab2gacaqGGaGaaeywaiaabccacaqG9aGaaeiiamaalaaabaGaaeymaaqaaiaabgdacaqGWaaaaiaabIhadaWcaaqaaiaabgdaaeaacaqGYaaaaiaab2dadaWcaaqaaiaabgdaaeaacaqGYaGaaeimaaaaaeaacaqGobGaaeyzaiaabEhacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabwgacaqGGaGaaeypaiaabccacaqGVbGaaeiBaiaabsgacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabwgacaqGGaGaaeylaiaabccacaqGZbGaaeyyaiaabogacaqGYbGaaeyAaiaabAgacaqGPbGaae4yaiaabwgaaeaacaqGobGaaeyzaiaabEhacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabwgacaqGGaGaaeypaaqaaiaabIfacaqGGaGaaeypaiaabccadaWcaaqaaiaabwdaaeaacaqG4aaaaiaab2cadaWcaaqaaiaabgdaaeaacaqGYaGaaeimaaaacaqG9aWaaSaaaeaacaqGYaGaae4maaqaaiaabsdacaqGWaaaaaqaaiaabMfacaqGGaGaaeypaiaabccadaWcaaqaaiaabodaaeaacaqG4aaaaiaab2cadaWcaaqaaiaabgdaaeaacaqGYaGaaeimaaaacaqG9aWaaSaaaeaacaqGXaGaae4maaqaaiaabsdacaqGWaaaaaqaaiaabIeacaqGLbGaaeOBaiaabogacaqGLbGaaeiiaiaab6gacaqGLbGaae4DaiaabccacaqGWbGaaeOCaiaab+gacaqGMbGaaeyAaiaabshacaqGGaGaae4CaiaabIgacaqGHbGaaeOCaiaabMgacaqGUbGaae4zaiaabccacaqGYbGaaeyyaiaabshacaqGPbGaae4BaiaabccacaqGVbGaaeOzaiaabccacaqGybGaaeilaiaabccacaqGzbGaaeiiaiaabggacaqGUbGaaeizaiaabccacaqGAbaabaGaaeypaiaabccadaWcaaqaaiaabkdacaqGZaaabaGaaeinaiaabcdaaaGaaeOoamaalaaabaGaaeymaiaabodaaeaacaqG0aGaaeimaaaacaqG6aWaaSaaaeaacaqGXaaabaGaaeymaiaabcdaaaaabaGaaeypaiaabccacaqGYaGaae4maiaabQdacaqGXaGaae4maiaabQdacaqG0aaaaaa@04A9@

Q.28 A, B and C are partners sharing profits in 2:2:1 ratio admitted D for 1/8 share which he acquired entirely from A. Calculate new profit sharing ratio.

Ans.

D’s Share = 1 8 A’s Sacrifice = 1 8 A’s new share = 2 5 1 8 = 11 40 BandC’s share remian same New profit sharing ratio of A:B:C:D = 11 40 : 16 40 : 8 40 : 5 40 = 11:16:8:5 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@C1F1@

Q.29 P and Q are partners sharing profits in 2:1 ratio. They admitted R into partnership giving him 1/5 share which he acquired from P and Q in 1:2 ratio. Calculate new profit sharing ratio.

Ans.

First calculating the sacrifice: R’s Share = 1 5 Acquired from P = 1 5 x 1 3 = 1 15 Acquired from Q = 1 5 x 2 3 = 2 15 New share = old share – sacrifice New share = P = 2 3 1 15 = 9 15 Q = 1 3 2 15 = 3 15 Hence new profit sharing ratio of P, Q and R = 9 15 : 3 15 : 3 15 = 3:1:1 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@FE3D@

Q.30 A, B and C are partners sharing profits in 3:2:2 ratio. They admitted D as a new partner for 1/5 share which he acquired from A, B and C in 2:2:1 ratio respectively. Calculate new profit sharing ratio.

Ans.

First calculating the sacrifice: D’s Share = 1 5 Acquired from A = 1 5 x 2 5 = 2 25 Acquired from B = 1 5 x 2 5 = 2 25 Acquired from C = 1 5 x 1 5 = 1 25 New share = old share – sacrifice New share = A = 3 7 2 25 = 61 175 B = 2 7 2 25 = 36 175 C = 2 7 1 25 = 43 175 Hence new profit sharing ratio of A, B, C and D = 61 175 : 36 175 : 43 175 : 35 175 = 61:36:43:35 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@3165@

Q.31 A and B were partners in a firm sharing profits in 3:2 ratio. They admitted C for 3/7 share which he took 2/7 from A and 1/7 from B. Calculate new profit sharing ratio.

Ans. 

First calculating the sacrifice: C’s Share = 3 7 Acquired from A = 2 7 Acquired from B = 1 7 New share = old share – sacrifice New share = A = 3 5 2 7 = 11 35 B = 2 5 1 7 = 9 35 Hence new profit sharing ratio of A, B and C = 11 35 : 9 35 : 15 35 = 11:9:15 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGgbGaaeyAaiaabkhacaqGZbGaaeiDaiaabccacaqGJbGaaeyyaiaabYgacaqGJbGaaeyDaiaabYgacaqGHbGaaeiDaiaabMgacaqGUbGaae4zaiaabccacaqG0bGaaeiAaiaabwgacaqGGaGaae4CaiaabggacaqGJbGaaeOCaiaabMgacaqGMbGaaeyAaiaabogacaqGLbGaaeOoaaqaaiaaboeacaqGNaGaae4CaiaabccacaqGtbGaaeiAaiaabggacaqGYbGaaeyzaiaabccacaqG9aWaaSaaaeaacaqGZaaabaGaae4naaaaaeaacaqGbbGaae4yaiaabghacaqG1bGaaeyAaiaabkhacaqGLbGaaeizaiaabccacaqGMbGaaeOCaiaab+gacaqGTbGaaeiiaiaabgeacaqGGaGaaeypaiaabccadaWcaaqaaiaabkdaaeaacaqG3aaaaaqaaiaabgeacaqGJbGaaeyCaiaabwhacaqGPbGaaeOCaiaabwgacaqGKbGaaeiiaiaabAgacaqGYbGaae4Baiaab2gacaqGGaGaaeOqaiaabccacaqG9aGaaeiiamaalaaabaGaaeymaaqaaiaabEdaaaaabaGaaeOtaiaabwgacaqG3bGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab2dacaqGGaGaae4BaiaabYgacaqGKbGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab2cacaqGGaGaae4CaiaabggacaqGJbGaaeOCaiaabMgacaqGMbGaaeyAaiaabogacaqGLbaabaGaaeOtaiaabwgacaqG3bGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab2daaeaacaqGbbGaaeiiaiaab2dacaqGGaWaaSaaaeaacaqGZaaabaGaaeynaaaacaqGTaWaaSaaaeaacaqGYaaabaGaae4naaaacaqG9aWaaSaaaeaacaqGXaGaaeymaaqaaiaabodacaqG1aaaaaqaaiaabkeacaqGGaGaaeypaiaabccadaWcaaqaaiaabkdaaeaacaqG1aaaaiaab2cadaWcaaqaaiaabgdaaeaacaqG3aaaaiaab2dadaWcaaqaaiaabMdaaeaacaqGZaGaaeynaaaaaeaacaqGibGaaeyzaiaab6gacaqGJbGaaeyzaiaabccacaqGUbGaaeyzaiaabEhacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGPbGaaeOBaiaabEgacaqGGaGaaeOCaiaabggacaqG0bGaaeyAaiaab+gacaqGGaGaae4BaiaabAgacaqGGaGaaeyqaiaabYcacaqGGaGaaeOqaiaabccacaqGHbGaaeOBaiaabsgacaqGGaGaae4qaaqaaiaab2dacaqGGaWaaSaaaeaacaqGXaGaaeymaaqaaiaabodacaqG1aaaaiaabQdadaWcaaqaaiaabMdaaeaacaqGZaGaaeynaaaacaqG6aWaaSaaaeaacaqGXaGaaeynaaqaaiaabodacaqG1aaaaaqaaiaab2dacaqGGaGaaeymaiaabgdacaqG6aGaaeyoaiaabQdacaqGXaGaaeynaaaaaa@F53A@

Q.32 A, B and C were partners in a firm sharing profits in 3:3:2 ratio. They admitted D as a new partner for 4/7 profit. D acquired his share 2/7 from A. 1/7 from B and 1/7 from C. Calculate new profit sharing ratio.

Ans.

First calculating the sacrifice: D’s Share = 4 7 Acquired from A = 2 7 Acquired from B = 1 7 Acquired from C = 1 7 New share = old share – sacrifice New share = A = 3 8 2 7 = 5 56 B = 3 8 1 7 = 13 56 C = 2 8 1 7 = 6 56 Hence new profit sharing ratio of A, B, C and D = 5 56 : 13 56 : 6 56 : 32 56 = 5:13:6:32 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@15DC@

Q.33 Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi as a new partner. Radha surrendered 1/3 of her share in favour of Gopi and Rukmani surrendered ¼ of her share in favour of Gopi. Calculate new profit sharing ratio.

Ans.

Old ratio = 3:2 Acquired from Radha = 1 3 x 3 5 = 3 15 Acquired from Rukmani = 1 4 x 2 5 = 2 20 New share = old share – sacrifice New share = Radha = 3 5 3 15 = 9 15 Rukmani = 2 5 2 20 = 6 20 Gopi= 3 15 + 2 20 = 18 60 Hence new profit sharing ratio of Radha, Rukmani and Gopi = 6 15 : 6 20 : 18 60 = 4:3:3 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@1592@

Q.34 Singh, Gupta and khan are partners in a firm sharing profits in 3:2:3 ratio. They admitted Jain as a new partner. Singh surrendered 1/3 of his share in favour of Jain; Gupta surrendered ¼ of his share in favour of Jain and Khan surrendered 1/5 in favour of Jain. Calculate new profit sharing ratio.

Ans.

Old ratio = 3:2:3 Singh’s sacrifice = 1 3 x 3 8 = 3 24 Gupta’s sacrifice = 1 4 x 2 8 = 2 32 Khan’s sacrifice = 1 5 x 3 8 = 3 40 New share = old share – sacrifice New share = Singh = 3 8 3 24 = 6 24 Gupta = 2 8 2 32 = 6 32 Khan= 3 8 3 40 = 12 40 Jain= 3 24 + 2 32 + 3 40 = 126 480 Hence new profit sharing ratio of Singh, Gupta, Khanand Jain = 6 24 : 6 32 : 12 40 : 126 480 = 120:90:144:126 =20:15:24:21 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@6063@

Q.35 Sandeep and Navdeep are partners in a firm sharing profits in 5:3 ratio. They admit C into the firm and the new profit sharing ratio was agreed at 4:2:1. Calculate the sacrificing ratio.

Ans.

Sacrificing ratio = Old ratio – New ratio New ratio = 4:2:1 Old ratio = 5:3 Sacrificing ratio Sandeep = 5 8 4 7 = 3 56 Navdeep = 3 8 2 7 = 5 56 = 3 56 : 5 56 = 3:5 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@B27E@

Q.36 Rao and Swami are partners in a firm sharing profits and losses in 3:2 ratio. They admit Ravi as a new partner for 1/8 share in the profits. The new profit sharing ratio between Rao and Swami is 4:3. Calculate new profit sharing ratio and sacrificing ratio.

Ans.

Let the total share = 1 Ravi’s Share = 1 8 Remaining Rao and Swami 1 – 1 8 = 7 8 New ratio Rao = 7 8 x 4 7 = 28 56 Swami = 7 8 x 3 7 = 21 56 Hence new profit sharing ratio of Rao, Swami and Ravi = 28 56 : 21 56 : 1 8 = 28:21:7 = 4:3:1 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGmbGaaeyzaiaabshacaqGGaGaaeiDaiaabIgacaqGLbGaaeiiaiaabshacaqGVbGaaeiDaiaabggacaqGSbGaaeiiaiaabohacaqGObGaaeyyaiaabkhacaqGLbGaaeiiaiaab2dacaqGGaGaaeymaaqaaiaabkfacaqGHbGaaeODaiaabMgacaqGNaGaae4CaiaabccacaqGtbGaaeiAaiaabggacaqGYbGaaeyzaiaabccacaqG9aWaaSaaaeaacaqGXaaabaGaaeioaaaaaeaacaqGsbGaaeyzaiaab2gacaqGHbGaaeyAaiaab6gacaqGPbGaaeOBaiaabEgacaqGGaGaaeOuaiaabggacaqGVbGaaeiiaiaabggacaqGUbGaaeizaiaabccacaqGtbGaae4DaiaabggacaqGTbGaaeyAaaqaaiaabgdacaqGGaGaaeylaiaabccadaWcaaqaaiaabgdaaeaacaqG4aaaaiaaykW7caaMc8UaaGPaVlaab2dacaaMc8UaaGPaVpaalaaabaGaae4naaqaaiaabIdaaaaabaGaaeOtaiaabwgacaqG3bGaaeiiaiaabkhacaqGHbGaaeiDaiaabMgacaqGVbGaaeiiaiaabccaaeaacaqGsbGaaeyyaiaab+gacaqGGaGaaeypaiaabccadaWcaaqaaiaabEdaaeaacaqG4aaaaiaabIhadaWcaaqaaiaabsdaaeaacaqG3aaaaiaab2dadaWcaaqaaiaabkdacaqG4aaabaGaaeynaiaabAdaaaaabaGaae4uaiaabEhacaqGHbGaaeyBaiaabMgacaqGGaGaaeypaiaabccadaWcaaqaaiaabEdaaeaacaqG4aaaaiaabIhadaWcaaqaaiaabodaaeaacaqG3aaaaiaab2dadaWcaaqaaiaabkdacaqGXaaabaGaaeynaiaabAdaaaaabaGaaeisaiaabwgacaqGUbGaae4yaiaabwgacaqGGaGaaeOBaiaabwgacaqG3bGaaeiiaiaabchacaqGYbGaae4BaiaabAgacaqGPbGaaeiDaiaabccacaqGZbGaaeiAaiaabggacaqGYbGaaeyAaiaab6gacaqGNbGaaeiiaiaabkhacaqGHbGaaeiDaiaabMgacaqGVbGaaeiiaiaab+gacaqGMbGaaeiiaiaabkfacaqGHbGaae4BaiaabYcacaqGGaGaae4uaiaabEhacaqGHbGaaeyBaiaabMgacaqGGaGaaeyyaiaab6gacaqGKbGaaeiiaiaabkfacaqGHbGaaeODaiaabMgaaeaacaqG9aGaaeiiamaalaaabaGaaeOmaiaabIdaaeaacaqG1aGaaeOnaaaacaqG6aWaaSaaaeaacaqGYaGaaeymaaqaaiaabwdacaqG2aaaaiaabQdadaWcaaqaaiaabgdaaeaacaqG4aaaaaqaaiaab2dacaqGGaGaaeOmaiaabIdacaqG6aGaaeOmaiaabgdacaqG6aGaae4naaqaaiaab2dacaqGGaGaaeinaiaabQdacaqGZaGaaeOoaiaabgdaaaaa@E7B9@ Sacrificing ratio = Old ratio – New ratio New ratio = 4:3:1 Old ratio = 3:2 Sacrificing ratio Rao = 3 5 4 8 = 4 40 Swami = 2 5 3 8 = 1 40 = 4 40 : 1 40 = 4:1 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@ACDF@

Q.37 Compute the value of goodwill on the basis of four year’s purchase of the average profits based on the last five years. The profits for the last five years were as follows:

Year
2013 40,000
2014 50,000
2015 60,000
2016 50,000
2017 60,000

Ans.

Goodwill = Average profits x number of years purchase

= ₹52,000 x 4 = ₹2,08,000

Average profit of last 5 years = ₹40,000+₹50,000+₹60,000+₹50,000+₹60,000 5 =52,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGbbGaaeODaiaabwgacaqGYbGaaeyyaiaabEgacaqGLbGaaeiiaiaabchacaqGYbGaae4BaiaabAgacaqGPbGaaeiDaiaabccacaqGVbGaaeOzaiaabccacaqGSbGaaeyyaiaabohacaqG0bGaaeiiaiaabwdacaqGGaGaaeyEaiaabwgacaqGHbGaaeOCaiaabohacaqGGaGaaeiiaaqaaiaab2dadaWcaaqaaiaabsdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaiaabUcacaqG1aGaaeimaiaabYcacaqGWaGaaeimaiaabcdacaqGRaGaaeOnaiaabcdacaqGSaGaaeimaiaabcdacaqGWaGaae4kaiaabwdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaiaabUcacaqG2aGaaeimaiaabYcacaqGWaGaaeimaiaabcdaaeaacaqG1aaaaaqaaiaab2dacaaMc8UaaeiyaiaaykW7caqG1aGaaeOmaiaabYcacaqGWaGaaeimaiaabcdaaaaa@7ADB@

Q.38 Firm’s Capital in a business is ₹2,00,000. The normal rate of return on Firm’s capital is 15%. During the year 2015 the firm earned a profit of ₹48,000. Calculate goodwill on the basis of 3 years purchase of super profit.

Ans.

Super profit=Actual profitNormal profit Goodwill=Super profit×Number of years purchase Normal profit = 2,00,000 × 15 100 =₹30,000 Super profit =₹48,000 – ₹30,000 =₹18,000 = ₹54,000. MathType@MTEF@5@5@+= feaahqart1ev3aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKf MBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2C G4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqipv0Je9sqqrpepC 0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yq aqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabe qaamaaeaqbaaGceaqabeaaqaaaaaaaaaWdbiaabofacaqG1bGaaeiC aiaabwgacaqGYbGaaeiiaiaabchacaqGYbGaae4BaiaabAgacaqGPb GaaeiDaiaaysW7caqG9aGaaGjbVlaabgeacaqGJbGaaeiDaiaabwha caqGHbGaaeiBaiaabccacaqGWbGaaeOCaiaab+gacaqGMbGaaeyAai aabshacaaMe8Uaae4eGiaaysW7caqGobGaae4BaiaabkhacaqGTbGa aeyyaiaabYgacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgaca qG0baabaGaae4raiaab+gacaqGVbGaaeizaiaabEhacaqGPbGaaeiB aiaabYgacaaMe8UaaeypaiaaysW7caqGtbGaaeyDaiaabchacaqGLb GaaeOCaiaabccacaqGWbGaaeOCaiaab+gacaqGMbGaaeyAaiaabsha caaMe8Uaae41aiaaysW7caqGobGaaeyDaiaab2gacaqGIbGaaeyzai aabkhacaqGGaGaae4BaiaabAgacaqGGaGaaeyEaiaabwgacaqGHbGa aeOCaiaabohacaqGGaGaaeiCaiaabwhacaqGYbGaae4yaiaabIgaca qGHbGaae4Caiaabwgaaeaapaqbaeaabeqaaaqaa8qacaqGobGaae4B aiaabkhacaqGTbGaaeyyaiaabYgacaqGGcGaaeiCaiaabkhacaqGVb GaaeOzaiaabMgacaqG0bGaaeiOaiaab2dacaqGGcGaaeOmaiaabYca caqGWaGaaeimaiaabYcacaqGWaGaaeimaiaabcdacaqGGcGaae41ai aaysW7daWcaaWdaeaapeGaaeymaiaabwdaa8aabaWdbiaabgdacaqG WaGaaeimaaaacaaMe8UaaeypaiaaysW7caqGYbGaaeyyaiaab2gaca qGZaGaaeimaiaabYcacaqGWaGaaeimaiaabcdaaaaapaqaa8qacaqG tbGaaeyDaiaabchacaqGLbGaaeOCaiaabccacaqGWbGaaeOCaiaab+ gacaqGMbGaaeyAaiaabshacaqGGaGaaeypaiaaysW7caqGYbGaaeyy aiaab2gacaqG0aGaaeioaiaabYcacaqGWaGaaeimaiaabcdacaqGGa Gaae4eGiaabccacaqGYbGaaeyyaiaab2gacaqGZaGaaeimaiaabYca caqGWaGaaeimaiaabcdacaqGGaGaaeypaiaaysW7caqGYbGaaeyyai aab2gacaqGXaGaaeioaiaabYcacaqGWaGaaeimaiaabcdaaeaacaaM e8UaaGjbVlaaysW7caaMe8UaaGjbVlaaysW7caaMe8UaaGjbVlaays W7caaMe8UaaGjbVlaaysW7caaMe8UaaGjbVlaaysW7caaMe8UaaGjb VlaaysW7caqG9aGaaeiiaiaabkhacaqGHbGaaeyBaiaabwdacaqG0a GaaeilaiaabcdacaqGWaGaaeimaiaab6caaaaa@0BD0@

Q.39 The books of Ram and Bharat showed that the Firm’s capital on 31/12/2016 was ₹5,00,000 and the profits for the last 5 years: 2015 ₹40,000; 2014 ₹50,000; 2013 ₹55,000; 2012 ₹70,000 and 2011 ₹85,000. Calculate the value of goodwill on the basis of 3 years purchase of the average super profits of the last 5 years assuming that the normal rate of return is 10%.

Ans.

Average profit of last 5 years = 40,000+50,000+55,000+70,000+85,000 5 =60,000 Normal profit = 5,00,000 × 10 100 =50,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGbbGaaeODaiaabwgacaqGYbGaaeyyaiaabEgacaqGLbGaaeiiaiaabchacaqGYbGaae4BaiaabAgacaqGPbGaaeiDaiaabccacaqGVbGaaeOzaiaabccacaqGSbGaaeyyaiaabohacaqG0bGaaeiiaiaabwdacaqGGaGaaeyEaiaabwgacaqGHbGaaeOCaiaabohacaqGGaGaaeiiaaqaaiaab2dadaWcaaqaaiaabsdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaiaabUcacaqG1aGaaeimaiaabYcacaqGWaGaaeimaiaabcdacaqGRaGaaeynaiaabwdacaqGSaGaaeimaiaabcdacaqGWaGaae4kaiaabEdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaiaabUcacaqG4aGaaeynaiaabYcacaqGWaGaaeimaiaabcdaaeaacaqG1aaaaaqaaiaab2dacaaMc8UaaeiyaiaaykW7caqG2aGaaeimaiaabYcacaqGWaGaaeimaiaabcdaaeaacaqGobGaae4BaiaabkhacaqGTbGaaeyyaiaabYgacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaab2dacaqGGaGaaeynaiaabYcacaqGWaGaaeimaiaabYcacaqGWaGaaeimaiaabcdacaqGGaGaaeiEaiaabccadaWcaaqaaiaabgdacaqGWaaabaGaaeymaiaabcdacaqGWaaaaiaaykW7caaMc8UaaeypaiaaykW7caqGGbGaaGPaVlaabwdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaaaaaa@A01B@

Super profit = 60,000 – 50,000 = ₹10,000

Goodwill = ₹10,000 × 3 = ₹30,000

Q.40 Rajan and Rajani are partners in a firm. Their capitals were Rajan ₹3,00,000; Rajani ₹2,00,000. During the year 2015 the firm earned a profit of ₹1,50,000. Calculate the value of goodwill of the firm by capitalization method assuming that the normal rate of return is 20%.

Ans.

Total capital of the firm = (₹3,00,000 +₹2,00,000) =₹5,00,000 Capitalised value = Actual value × 100 Normal rate of return = 1,50,000 × 100 20 =7,50,000 Goodwill=Capitalised valueActual capital =₹7,50,000 –₹5,00,000 =₹2,50,000 MathType@MTEF@5@5@+= feaahqart1ev3aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKf MBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2C G4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC 0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yq aqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabe qaamaaeaqbaaGceaqabeaaqaaaaaaaaaWdbiaabsfacaqGVbGaaeiD aiaabggacaqGSbGaaeiiaiaabogacaqGHbGaaeiCaiaabMgacaqG0b GaaeyyaiaabYgacaqGGaGaae4BaiaabAgacaqGGaGaaeiDaiaabIga caqGLbGaaeiiaiaabAgacaqGPbGaaeOCaiaab2gacaqGGaGaaeypaa qaa8aacaqGOaGaae4sa8qacaqGZaGaaeilaiaabcdacaqGWaGaaeil aiaabcdacaqGWaGaaeimaiaabccacaqGRaGaaGjbV=aacaqGlbWdbi aabkdacaqGSaGaaeimaiaabcdacaqGSaGaaeimaiaabcdacaqGWaWd aiaabMcapeGaaeiiaiaab2dacaaMe8Uaae4saiaabwdacaqGSaGaae imaiaabcdacaqGSaGaaeimaiaabcdacaqGWaaapaqaaiaaboeacaqG HbGaaeiCaiaabMgacaqG0bGaaeyyaiaabYgacaqGPbGaae4Caiaabw gacaqGKbGaaeiiaiaabAhacaqGHbGaaeiBaiaabwhacaqGLbGaaeii aiaabccacaqGGaaabaGaaeypamaalaaabaGaaeyqaiaabogacaqG0b GaaeyDaiaabggacaqGSbGaaeiiaiaabAhacaqGHbGaaeiBaiaabwha caqGLbGaaeiiaiaabIhacaqGGaGaaeymaiaabcdacaqGWaGaaeiiai aabccaaeaacaqGobGaae4BaiaabkhacaqGTbGaaeyyaiaabYgacaqG GaGaaeOCaiaabggacaqG0bGaaeyzaiaabccacaqGVbGaaeOzaiaabc cacaqGYbGaaeyzaiaabshacaqG1bGaaeOCaiaab6gacaqGGaGaaeii aiaabccaaaaabaGaaeypaiaabccacaqGXaGaaeilaiaabwdacaqGWa GaaeilaiaabcdacaqGWaGaaeimaiaabccacaqG4bGaaeiiamaalaaa baGaaeymaiaabcdacaqGWaaabaGaaeOmaiaabcdaaaGaaGPaVlaayk W7caqG9aGaaGjbVlaabUeacaaMc8Uaae4naiaabYcacaqG1aGaaeim aiaabYcacaqGWaGaaeimaiaabcdaaeaapeGaae4raiaab+gacaqGVb GaaeizaiaabEhacaqGPbGaaeiBaiaabYgacaaMe8UaaeypaiaaysW7 caqGdbGaaeyyaiaabchacaqGPbGaaeiDaiaabggacaqGSbGaaeyAai aabohacaqGLbGaaeizaiaabccacaqG2bGaaeyyaiaabYgacaqG1bGa aeyzaiaaysW7cqGHsislcaaMe8UaaeyqaiaabogacaqG0bGaaeyDai aabggacaqGSbGaaeiiaiaabogacaqGHbGaaeiCaiaabMgacaqG0bGa aeyyaiaabYgaaeaacaqG9aGaaGjbVlaabUeacaqG3aGaaeilaiaabw dacaqGWaGaaeilaiaabcdacaqGWaGaaeimaiaabccacaqGtaIaaGjb VlaabUeacaqG1aGaaeilaiaabcdacaqGWaGaaeilaiaabcdacaqGWa GaaeimaiaabccacaqG9aGaaGjbVlaabUeacaqGYaGaaeilaiaabwda caqGWaGaaeilaiaabcdacaqGWaGaaeimaaaaaa@06FC@

Q.41 A business has earned average profits of ₹1,00,000 during the last few years , find out the value of goodwill by capitalization method, given that the assets of the business are ₹10,00,000 and its external liabilities are ₹1,80,000. The normal rate of return is 10%?

Ans.

Capital employed = Assets – External liabilities

= ₹10,00,000 – ₹1,80,000 = ₹8,20,000

Estimated capital required to earn average profit ₹1,00,000 @ normal return 10%.

Normal profit = 1,00,000 x 100 10 =10,00,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeaacaGaaiaabeqaamaaeaqbaaGceaqabeaacaqGobGaae4BaiaabkhacaqGTbGaaeyyaiaabYgacaqGGaGaaeiCaiaabkhacaqGVbGaaeOzaiaabMgacaqG0bGaaeiiaiaab2dacaqGGaGaaeymaiaabYcacaqGWaGaaeimaiaabYcacaqGWaGaaeimaiaabcdacaqGGaGaaeiEaiaabccadaWcaaqaaiaabgdacaqGWaGaaeimaaqaaiaabgdacaqGWaaaaiaaykW7caaMc8UaaeypaiaaykW7caqGGbGaaGPaVlaabgdacaqGWaGaaeilaiaabcdacaqGWaGaaeilaiaabcdacaqGWaGaaeimaaqaaaaaaa@647B@

Goodwill = Estimated capital – Actual capital

= ₹10,00,000 – ₹8,20,000 = ₹1,80,000

Q.42 A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They decide to admit C into partnership with ¼ share in profits. C will bring in ₹30,000 for capital and the requisite amount of goodwill premium in cash.

The goodwill of the firm is valued at ₹20,000. The new profit sharing ratio is 2:1:1. A and B withdraw their share of goodwill. Give necessary journal entries.

Ans.

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 35,000
To C’s Capital A/c 30,000
To Premium for goodwill A/c 5,000
(Being capital and goodwill brought by C)
ii Premium for goodwill A/c Dr. 5,000
To A’s Capital A/c 2,000
To B’s Capital A/c 3,000
(Being goodwill distributed in sacrificing ratio)
iii A’s Capital A/c Dr. 2,000
B’s Capital A/c Dr. 3,000
To Cash A/c 5,000
(Being amount of goodwill withdrawn)

Sacrificing Ratio = Old Ratio – New Ratio A = 3 5 2 4 = 12-10 20 = 2 20 A = 2 5 1 4 = 8-5 20 = 3 20 Sacrificing Ratio = A = 2 20 Sacrificing Ratio = B = 3 20 = 2:3 Goodwill of the firm =₹ 20,000 C’s share of Goodwill = ₹20,000 × 1 4 =₹5,000 A will receive =₹5,000 × 2 5 = ₹2,000 B will receive=₹5,000× 3 5 = ₹3,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXafv3ySLgzGmvETj2BSbqefm0B1jxALjhiov2Daebbfv3ySLgzGueE0jxyaibaieYBf9irVeeu0dXdh9vqqj=hEeeu0xXdbba9frFj0=OqFfea0dXdd9vqaq=JfrVkFHe9pgea0dXdar=Jb9hs0dXdbPYxe9vr0=vr0=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@19B3@

Q.43 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 ₹50,000 for his capital and ₹10,000 for his 1/4 share of goodwill. Goodwill already appears in the books of Arti and Bharti at ₹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.

Ans.

Particulars Dr. (₹) Cr. (₹)
i Arti’s Capital A/c Dr. 3,000
Bharti’s Capital A/c Dr. 2,000
To Goodwill A/c 5,000
(Being amount of goodwill written off)
ii Cash A/c Dr. 60,000
To Sarthi’s Capital A/c 50,000
To Premium for goodwill A/c 10,000
(Being capital and goodwill brought by Sarthi)
iii Premium for goodwill A/c Dr. 10,000
To Arti’s Capital A/c A/c 4,000
To Bharti’s Capital A/c 6,000
(Being goodwill distributed in sacrificing ratio)

Arti : Bharti Old Ratio = 3:2 Sarthi admitted for 1 4 share in new firm. Arti : Bharti: Sarthi New Ratio = 2:1:1 Sacrificing Ratio = Old Ratio – New Ratio Arti = 3 5 2 4 = 2 20 Bharti = 2 5 1 4 = 3 20 Arti will receive =₹10,000 × 2 5 = ₹4,000 Bharti will receive =₹10,000 × 3 5 = ₹6,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXafv3ySLgzGmvETj2BSbqefm0B1jxALjhiov2Daebbfv3ySLgzGueE0jxyaibaieYBf9irVeeu0dXdh9vqqj=hEeeu0xXdbba9frFj0=OqFfea0dXdd9vqaq=JfrVkFHe9pgea0dXdar=Jb9hs0dXdbPYxe9vr0=vr0=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@2404@

Q.44 Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted Christopher for ¼ share in the profits. The new profit sharing ratio agreed was 2:1:1. Christopher brought ₹50,000 for his capital. His share of goodwill was agreed to at ₹15,000. Christopher could bring only ₹10,000 out of his share of goodwill. Record necessary journal entries in the books of the firm.

Ans.

Particulars Dr. (₹) Cr. (₹)
i Cash A/c Dr. 60,000
To Christopher’s Capital A/c 50,000
To Premium for goodwill A/c 10,000
(Being capital and goodwill brought by Christopher)
ii Premium for goodwill A/c Dr. 10,000
Christopher’s Current A/c Dr. 5,000
To Aditya’s Capital A/c 6,000
To Balan’s Capital A/c 9,000
(Being goodwill distributed in sacrificing ratio)

Sacrificing Ratio = Old Ratio – New Ratio Aditya = 3 5 2 4 = 2 20 Balam = 2 5 1 4 = 3 20 Sacrificing Ratio = 2:3 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXafv3ySLgzGmvETj2BSbqefm0B1jxALjhiov2Daebbfv3ySLgzGueE0jxyaibaieYBf9irVeeu0dXdh9vqqj=hEeeu0xXdbba9frFj0=OqFfea0dXdd9vqaq=JfrVkFHe9pgea0dXdar=Jb9hs0dXdbPYxe9vr0=vr0=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@8BC8@

Q.45 Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3:2 ratio. They admitted Ram Lal for 1/4 share on 01/01/2013. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of last 4 years which were ₹50,000 for 2013; ₹60,000 for 2014; ₹90,000 for 2015; and ₹70,000 for 2016. Ram Lal did not bring his share of goodwill premium in cash.

Record the necessary journal entries in the books of the firm on Ram Lal’s admission when:
a. Goodwill already appears in the books at ₹2,02,500.
b. Goodwill appears in the books at ₹2,500.
c. Goodwill appears in the books at ₹2,05,000.

Ans.

Particulars Dr. (₹) Cr. (₹)
i. Mohan Lal’s Capital A/c Dr. 1,21,500
Sohan Lal’s Capital A/c Dr. 81,000
To Goodwill A/c 2,02,500
(Being existing goodwill written off)
ii. Ram Lal’s Current A/c Dr. 50,625
To Mohan Lal’s Capital A/c 30,375
To Sohan Lal’s Capital A/c 20,250
(Being share of goodwill of new partner not paid in cash adjusted from his current account and distributed among sacrificing partners)

Case (b)

Particulars Dr. (₹) Cr. (₹)
i. Mohan Lal’s Capital A/c Dr. 1,500
Sohan Lal’s Capital A/c Dr. 1,000
To Goodwill A/c 2,500
(Being existing goodwill written off)
ii. Ram Lal’s Current A/c Dr. 50,625
To Mohan Lal’s Capital A/c 30,375
To Sohan Lal’s Capital A/c 20,250
(Being share of goodwill of new partner not paid in cash adjusted from his current account and distributed among sacrificing partners)

Case (c)

Particulars Dr. (₹) Cr. (₹)
i. Mohan Lal’s Capital A/c Dr. 1,23,000
Sohan Lal’s Capital A/c Dr. 82,000
To Goodwill A/c 2,05,000
(Being existing goodwill written off)
ii. Ram Lal’s Current A/c Dr. 50,625
To Mohan Lal’s Capital A/c 30,375
To Sohan Lal’s Capital A/c 20,250
(Being share of goodwill of new partner not paid in cash adjusted from his current account and distributed among sacrificing partners)

Working Notes: Average profit of last 4 years = 50,000+60,000+90,000+70,000 4 =67,500 Goodwill = 67,500×3=2,02,500 Ram Lal’s share = 2,02,500 × 1 4 =50,625 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@C728@

Q.46 Rajesh and Mukesh are equal partners in a firm. They admit Hari into partnership and the new profit sharing ratio between Rajesh, Mukesh and Hari is 4:3:2. On Hari’s admission goodwill of the firm is valued at ₹36,000. Hari is unable to bring his share of goodwill premium in cash. Rajesh, Mukesh and Hari decided not to show goodwill in their balance sheet.

Record necessary journal entries for the treatment of goodwill on Hari’s admission.

Ans. Books of Rajesh, Mukesh and Hari

Journal

Particulars Dr. (₹) Cr. (₹)
i. Hari’s Current A/c Dr. 8,000
To Rajesh’s Capital A/c 2,000
To Mukesh’s Capital A/c 6,000
(Being share of goodwill of new partner not paid in cash adjusted from his current account and distributed among sacrificing partners)

Hari’s share of goodwill = ₹36,000 x 2 9 =8,000 Sacrificing ratio = Old ratio – New ratio Sacrificing ratio Rajesh = 1 2 4 9 = 1 18 Mukesh = 1 2 3 9 = 3 18 = 1:3 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@BB89@

Q.47 Amar and Akbar are equal partners in a firm. They admitted Anthony as a new partner and the new profit sharing ratio is 4:3:2. Anthony could not bring this share of goodwill ₹45,000 in cash. It is decided to do adjustment for goodwill without opening goodwill account.

Pass the necessary journal entry for the treatment of goodwill.

Ans.

Particulars Dr. (₹) Cr. (₹)
i. Anthony’s Current A/c Dr. 45,000
To Amar’s Capital A/c 11,250
To Akbar’s Capital A/c 33,750
(Being share of goodwill of new partner not paid in cash adjusted from his current account and distributed among sacrificing partners)

Working Notes:

Sacrificing ratio = Old ratio – New ratio Sacrificing ratio Amar = 1 2 4 9 = 1 18 Akbar = 1 2 3 9 = 3 18 = 1:3 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@8D54@

Q.48 A and B are partners sharing profits and losses in the ratio of 3:1. On 1st January, 2017 they admitted C as a new partner for ¼ share in the profits of the firm.

C brings ₹20,000 as for his ¼ share in the profits of the firm. The capitals of A and B after all adjustments in respect of goodwill, revlauation of assets and liabilities etc. has been worked out at ₹50,000 for A and ₹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.

Ans.

Let total share = 1 C’s share = 1 4 Remaining share of A and B = 1- 1 4 = 3 4 Profit/loss sharing ratio of A and B = 3:1 New share of A = 3 4 x 3 4 = 9 16 New share of B = 3 4 x 1 4 = 3 16 New profit sharing ratio of A, B and C: = 9 16 : 3 16 : 1 4 = 9 16 : 3 16 : 4 16 = 9:3:4 Total capital on the basis of C = 20,000 x 4 = ₹ 80,000 Required capitals in new firm A = 80,000 x 9 16 =₹ 45,000 B = 80,000 x 3 16 =₹ 15,000 C = 80,000 x 4 16 =₹ 20,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@85C8@

However, actual capitals of A and B are ₹ 50,000 and ₹12,000 respectively. Hence A will withdraw ₹ 5,000 and B will introduce ₹ 3,000 to make up the required capital.

Journal Entries

Particulars Dr. (₹) Cr. (₹)
2017

Jan 01

A’s Capital A/c Dr. 5,000
To Bank A/c 5,000
(Being amount withdrawn to make up for the required capital)
ii Bank A/c Dr. 3,000
To B’s Capital A/c 3,000
(Being amount introduced to make up for the required capital)

Q.49 Pinky, Qumar and Roopa partners in a firm sharing profits and losses in the ratio of 3:2:1. S is admitted as a new partners for ¼ share in the profits of the firm, which he gets 1/8 from Pinky and 1/16 each from Qumar and Roopa.

The total capital of the new firm after Seema’s admission will be ₹2,40,000. Seema is required to bring in cash equal to ¼ of the total capital of the new firm. The capitals of the old partners also have to be adjusted in proportion of their profit sharing ratio. The capitals of Pinky, Qumar and Roopa after all adjustments in respect of goodwill and revaluation of assets and liabilities have been made are Pinky ₹ 80,000, Qumar ₹ 30,000 and Roopa ₹ 20,000.

Calculate the capitals of all the partners and record the necessary journal entries for doing adjustments in respect of capitals according to the agreement between the partners.

Ans.

New profit sharing ratio of Pinky = 3 6 1 8 = 18 48 Qumar = 2 6 1 16 = 13 48 Roopa = 1 6 1 16 = 5 48 Seema= 1 8 + 1 16 + 1 16 = 12 48 = 18 48 : 13 48 : 5 48 : 12 48 =18:13:5:12 Newcapital Pinky = 18 48 x2,40,000=90,000 Qumar = 13 48 x2,40,000=65,000 Roopa = 5 48 x2,40,000=₹ 25,000 Seema= 12 48 x2,40,000=60,000 MathType@MTEF@5@5@+=feaaguart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbwvMCKfMBHbqeduuDJXwAKbYu51MyVXgaruWqVvNCPvMCG4uz3bqefqvATv2CG4uz3bIuV1wyUbqeeuuDJXwAKbsr4rNCHbGeaGqiVv0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@48ED@

Partner Actual capital after all adjustments (₹) New capital required (₹) Difference

Excess/short (₹)

Pinky 80,000 90,000 10,000 short
Qumar 30,000 65,000 35,000 short
Roopa 20,000 25,000 5,000 short
Seema 60,000 60,000 share

Journal Entry

Particulars Dr. (₹) Cr. (₹)
Bank A/c Dr. 1,10,000
To Pinky’s Capital A/c 10,000
To Qumar’s Capital A/c 35,000
To Roopa’s Capital A/c 5,000
To Seema’s Capital A/c 60,000
(Being amount introduced to make up for the required capital)

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FAQs (Frequently Asked Questions)

1. According to Chapter 3 of Class 12 Accountancy, what variables impact goodwill?

Internal and external factors can influence goodwill. Internal factors are those which exist within the firm. External elements, on the other hand, are those that are part of the company’s economic environment. Efficient management, quality of goods and services, location, contracts, access to supplies, after-sale services to customers, patents owned by the firm, effective advertising, and strong customer relations are some of the elements that impact goodwill.

2. What is the Sacrificing Ratio, and how does it work?

 The sacrificing ratio is the percentage of profit sharing that current partners give up when a new partner enters the company. The difference between the old and new profit ratios is used to compute it. Because the new partner must pay the old partner in order for the new partner to make the profit sacrifice, the sacrificing ratio is determined. This payment is made to the partner as a  goodwill gesture.