A percentage of potential gains will accrue regardless of the current goodwill and future earnings will not be shared by the retired or deceased partner. B retires and A and C decide to share profits in the ratio of 1:2. Retirement of Partner | Introduction & Treatment of Goodwill | Class 12th | New Syllabus | Chapter 4Meaning and Formula for Calculating Gain Ratio :-https:. 7,000. 1,10,000 and Rs. 25,000. This article is being improved by another user right now. 625. Working Note:-1.) The profits for the years ending 31-3-2020, 31-3-2019, 31-32018 and 313-2017 were Rs. Retirement of a partner | Class 12 | Accounts | term 2 | treatment of goodwill | part 2 8,400. A, C and D decided to share future profits equally. 1,20,000Bs share in goodwill = Rs. Sovereign Gold Bond Scheme Everything you need to know! the Balance Sheet of the firm after Gs retirement and Gs Loan Account till it is finally paid off. (A)On 1st April, 2018 Ashish, Namish and Aman were partners sharing profits and losses in the ratio 2/5, 2/5 and 1/5 respectively. (3) Total expenses must similarly be calculated by taking the amount paid and adjusting it for amounts outstanding and unexpired in the beginning and at the end of the year. 90,000 4/9 = Rs. 10,000, Computation of New Ratio:-A Gaining Ratio of rjun = 14/25+5/25=(14 + 5)/25=19/25A Gaining Ratio of rjun Nakul = 6/25+0=6/25Gaining ratio = 19 : 6. There is no need of provision for doubtful debts, as the debtors are all good. (v) Sharing between all partners of combined gains and losses and reserves. (f) The dead partners share of the companys cumulative damages. L, M and O were partners in a firm sharing profits in 1 : 3 :2 ratio. Pass the necessary journal entry. 1,60,000, Rs. (e) Kavya was to be paid Rs. Goodwill is an intangible asset and valued only when there is a change in business like admission of a partner, retirement of a partner and amalgamation of firms Nikhil Priya Follow Recommended Treatment of goodwill PRASANTH VENPAKAL 3.4K views26 slides ADMISSION OF PARTNER NIKET PATEL 24K views4 slides (iii) Amount payable to B was transferred to his executors.Pass necessary Journal Entries and show the working clearly.Solution 62 (new). 3,00,000. A, B and C were partners sharing profits and losses in the ratio of 5:3:2. 15,000, Rs. (b) Interest on Capital which amounted to Rs. Question 94. Case 2 Changes in assets and liabilities not to be brought into books: This will naturally depend on the terms of agreement. 6,00,000 and C Rs. Remaining profit = Rs 72,000 Rs 12,000 60,000. 10,000. Most Upvoted Answer. Annuity tables show that Re. Working Note:-Calculation of Gaining Ratio:-Gaining Ratio = New Ratio Old Ratio, Gaining Ratio of L = 2/6-1/2=(2 3)/6=1/6 (Gain), Gaining Ratio of N = 1/6-1/2=(1 3)/6=2/6 (Gain), Ms Share of Goodwill = Rs. L retired and the new profit sharing ratio between M and O was 1 : 2. (c) Land and building to be increased to Rs. 64,000)/42/52.5/12 = Rs. (ii) That the profits be divided as follows: Brown 1/2; Smith 1/3 and carried to a Reserve account 1/6. 1,00,000 + Rs. 90,000 1/2 = Rs. 20,571Kamleshs Contribution = Rs. A, C and D decide to Continue the firm sharing profits equally. The existing goodwill (if any) will be written off by debiting all partners capital account in their old ratio and crediting the goodwill account. Calculation of Gaining Ratio:-Samans Gain = 3/5-2/7=(21-10)/35=11/35Meetas Gain = 2/5-2/7=(14-10)/35=4/35Gaining Ratio = 11:4. Laurel agreed to make a friendly loan to Charlie by transfer from his capital account of half the amount which Charlie had to provide. (3) Liability for Workmens Compensation amounting to Rs. In this case the journal entry is as follows. Retirement of a Partner | Treatment of Goodwill | Accounts Class 12 Telegram https://t.me/tccommerce Like || Share || Subscribe Tutor Classes Commerce https://bit.ly/3cCNm6h-------------------------------------------------------------------Retirement of Partner SeriesL1 Introduction https://youtu.be/TI-6lTwVA50L2 New Profit Ratio Gaining Ratio https://youtu.be/wB5c-5ysAxsL3 Numerical Gaining Ratio https://youtu.be/N_NjqJkBaKML4 Treatment of Goodwill https://youtu.be/I_0jNDa_bl4Keep Learning \u0026 stay connected with us! Like us on Facebook: https://www.facebook.com/TutorClassesEducation============== The track used in the Video: Falling Together Artificial.Music \u0026 Syiphorous [Audio Library Release]Music provided by Audio Library PlusWatch: https://youtu.be/TqlnW2oUIOM Free Download / Stream: https://alplus.io/falling-together=================== Background Music Credits: https://www.youtube.com/audiolibrary/ Thumbnail credits: https://canva.com===================Here You will find all Video Lectures, Study Materials, and Content for the best way preparation for the Commer okce Stream. The bookkeeping entry to record the retirement of the partner is as follows. Prepare Revaluation A/c, Partners Capital accounts and Kavyas Loan Account till it is finally paid. 4,000 in cash at bank. Question 96. Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4 : 3 :3. 2,40,000 17/24 = Rs. 10,000 and bad debts amounting to Rs. (B)A, B, C and D are partners sharing profits in the ratio of 5:4:3:2. (b) Reserve for bad and doubtful debts to be maintained at 10% on debtors. 12,000 + Rs. New Share of P = 11/18-1/12-1/12=(22-3-3)/36=16/36New Share of Q = 7/18-1/12=(14-3)/36=11/36P, Q, and S have a new profit-sharing ratio = 16/36:11/36:1/4P, Q, and S have a new profit-sharing ratio = 16 : 11 : 9. 2012, when the firms balance sheet was as under: Basuda Ltd.s share in goodwill and capital was acquired by Avinash and Chinmoy Ltd. in the ratio of 1 : 3 respectively, the continuing partners bringing in the necessary finance to pay off Basuda Ltd. A retires and New ratio of B and C 11:9 . (iii) Transfer of the remaining partners capital accounts to a current profit-sharing ratio. Shiv. 6,000. 6,00,000. 16,000 )/3Average Profit = Rs. Adjusted capital is calculated after making adjustments related to revaluation, undistributed profit and reserves, and accumulated losses. A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. 90,000 1/6 = Rs. 2,20,000 + Rs. Thank you for your valuable feedback! 20,000. 63,000Cash withdrawn by Y = Rs. (d) Fixed Assets were to be depreciated by 10%. The retiring partner is paid 90,000 in cash and their capital account of 75,000 is cleared. Computation of Gaining Ratio:-Samans Gain = 3/5-2/7=(21-10)/35=11/35Meetas Gain = 2/5-2/7=(14-10)/35=4/35Gaining Ratio = 11:4, 2.) Question 48. The Retirement of a partner means that someone else has to take over some or all of their roles. Goodwill is an intangible asset. 4,000 will not be claimed. When the net assets are adjusted to fair value any gain or loss is allocated to all partners based on the current profit sharing arrangements and their capital accounts are debited or credited accordingly. 55,000, Super Profit = Average Profit Normal ProfitsSuper Profit = Rs. Pass necessary journal entry for the treatment of goodwill on Zs retirement. Since a part of the future profits will be accruing because of the present goodwill and the retiring of deceased partner will not be sharing future profits, it will be fair to compensate the retiring or decreased partner for the same. (B)P, Q and R were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. 45,000 Rs. 3,000 3/10 = Rs. Question 66 (new). Any reserve or accumulated profits appearing in the books should be transferred to all the partners in the old ratio. C retires and new profit sharing ratio is agreed at 3 : 1. Question 16. Brown and Smith are partners. 2. 64,000, 3.) Further, provision for legal damages is to be increased by 1,200 and furniture to be brought up to Rs. However, there are some situations where this transfer happens. (iii) Closing stock be valued at Rs. For the purpose, actual cash is to be brought in or paid off.You are required to prepare the Revaluation Account, Partners Capital Accounts, Bank account and revised balance sheet after Ys retirement. A ccounting treatment of goodwill, when Goodwill (premium for goodwill) is brought in kind. 3,00,000 = Rs. 1,05,000Zs Share of goodwill = Rs. On 1-4-2017 their Balance Sheet was as follows: S retired from the firm on 1-4-2017 and his share was ascertained on the revaluation of assets as follows:Stock Rs. Question 89. 90,000Rs share of Goodwill = Rs. 45,000. 1,80,000.Pass journal entries to give effect to above adjustments and prepare Revaluation Account.Solution 26 (new). 1,50,000. 1,45,000 and Rs. On Cs retirement, his share is acquired by A and B in the ratio of 6 : 4. (vi) Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. Question 104 (new). Question 5. Enhance the article with your expertise. 90,000 1/3 = Rs. (B)X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. After this adjustment the balance on the retiring partners capital account represents the amount due to them based on fair value; however, this may of may not necessarily be the amount paid to the retiring partner. 5,40,000.Pass necessary journal entries for the above transactions in the books of the firm on Sameers retirement. (vi) Amount payable to B shall remain in the business as loan carrying interest at 18% p.a.You are required to :(a) give journal entries to give effect to the above, and(b) prepare the opening balance sheet of A and B at 1st April, 2018. 6,000. Calculate the gaining ratio. 1,98,000Rs Share of Goodwill = Rs. There can be case of hidden goodwill in case of retirement also, that can be calculated the same way as in case of admission of a partner and should be shared by all the partners including the retiring partner. Working Note:-1.) 12,600 2/5 = Rs. 45,000. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. The death of a partner in a relationship is often associated with grief, which can be challenging to handle. (b) Sindhus share of profit till the date of his death was to be calculated on the basis of sales. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. 1,20,000 2/5 = 48,000, Calculation of Profit:-Profit of the firm = Rs. Profits ending 31st March were: 2016 Rs. 3,00,000 5/8 = Rs. C retires and for this purpose goodwill is valued at two years purchase of average super profits of last four years, which are as under: The normal profits for similar firms is Rs. 4,00,000. His share of the increase in the appreciation of the companys goodwill.2.) 3,000; Machinery Rs. 90,000 1/9 = Rs. (B)On 1st April, 2018 A, B and C were partners sharing profits and losses in the ratio of A 5/10, B 3/10 and C 2/10 respectively. (f) The share of the deceased partner in the shared life policy. Suppose a partnership has three partners A, B, and C. The partners share income in the ratio 35%, 45%, and 25% and after adjustment to fair value, have capital accounts of 115,000, 60,000, and 75,000 as summarized in the table below. (e) Rent outstanding (not provided for as yet) was Rs. 12,000; 2017 Rs. But mostly, the existing value of firms goodwill is more than the book value. The next illustration seeks to clarify the point. 1,00,000. 1,20,000 + Rs. 60,000If sales are Rs. Working Note:Cs share of Goodwill = 9,000 x 1/6 = Rs. It is not a fictitious asset. Alternatively, only the retiring partner may be credited with his share, the remaining reserve continuing to appear in the books of account. 3,30,000 profit will be 60,000/(4,00,000 ) 3,30,000= Rs. 4,000 will not be claimed.Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of K and M after Ls retirement. 36,000 and be adjusted into the Capital Accounts of A and C who will share profits in future in the ratio of 3 : 1. If the existing value of firms goodwill is less than the book value, bringing down the book value to existing value is all that will be required to be done. Kavya, Manya and Navita were partners sharing profits as 50%, 30% and 20% respectively. (b) The goodwill of the firm is valued at Rs. 3,30,000 amounted between the period from 1st April. 10,000; Sundry Debtors Rs. 2017 to 31st December, 2019. 20,571 Kamleshs Contribution = Rs. Working Note:-1.) 4,00,000 along-with his share of goodwill. (iii) The net amount payable to Es executors was transferred to his Loan Account, to be paid later on.Prepare Revaluation Account, Partners Capital Accounts and Es Executor A/c. (ii) That the land and buildings be appreciated by 10%. Calculate the new ratio if X retires. The student will see that As share amounting to Rs 12,000 is one-fifth of Rs 60,000. On 1st April, 2018, their goodwill was valued at Rs. 10,000 Rs. Question 1. (iv) Rs. Profits for the year 2016, 2017 and 2018 were Rs. A, B and C are partners sharing profits in the ratio 4:3:2. C retires and A and B agree to share future profits in the ratio of 6:4. 1,60,000Sindhus Share of Goodwill = Rs. Question 58. 3,000. 5,000, Zs Capital in the new firm should be = Rs. (A)P, Q and R are equal partners. (iii) Bad Debts amounted to Rs. They also decided to record the effect of the following without affecting their book values: Rs.General Reserve 1,00,000Profit & Loss Account 45,000Advertisement Suspense Account 25,000You are required to pass the necessary single adjusting entry. the capital account of Ajay showed a credit balance of Rs. These solutions are free and will help you to prepare for Class 12 Accountancy. Working Note:-Calculation of Gaining Ratio:-Gaining Ratio = New Ratio Old RatioGaining Ratio of L = 5/8-4/9=(45-32)/72=13/72, Gaining Ratio of N = 3/8-2/9=(27 16)/72=11/72. Assuming that these adjustments are duly carried out, show the Capital Accounts and Balance Sheet of Shyam after Ram has been paid off. 25,000Net Effect = Rs. 40,000 and capital accounts of Raja and Badshah be adjusted accordingly and any difference be either paid / brought in cash.Prepare Revaluation Account, Capital Accounts and the Balance Sheet of new firm assuming that one-third of the amount due to Nawab was paid in cash and balance was carried to Loan A/c. B retires and his share is taken by A and C in the ratio of 5:3. K, L and M were partners in a firm sharing profits in the ratio of 5 :3 : 2. 75,000 and Rs. Gaining Ratio of Ramesh and Mohan is 1:1. These solutions have been designed based on the latest Class 12 DK Goel Accountancy book used by commerce stream students issued for the current year and the questions given in each chapter. 38,000 and Stock at Rs. 36,000 and Rs. A, B and C are partners in a firm sharing profits in the ratio of 5:3:2. 60,000, i.e., X and Z will share Ys shale of profit in the ratio of 1,00,000 : 60,000 = 5 : 3.New Profit sharing ratios of X and Z will be:X gets 5/8th of Ys share of 2/6 = 5/8 2/6=5/24, Xs New share = 3/6+5/24=(12 + 5)/24=17/24, Z gets 3/8th of Ys share of 2/6 = 3/8 2/6=3/24, New Ratio between X and Z = 17/24:7/24=17:7, (iii) Division of Profit between X and Z:Profit = Rs. On Mohans death the goodwill of the firm was valued at Rs. Interest o Es Loan = Rs. (ii) That the provision for doubtful debts be increased to 5% on debtors. Following terms were agreed :(a) Goodwill of the firm was valued at Rs. A, B and C are partners sharing profits in the ratio of 5: 3:2. Computation of adjusted Capitals of G and F:Gs Capital + Fs Capital = Rs. Under the terms of the partnership deed, he was entitled to receive for the year succeeding his retirement one-half of the share of profits which he was receiving at the time of his retirement as a consideration for leaving his capital in the firm as a loan. 10,970. (iii) Prepare the balance sheet of the firm after Ghanashyams admission. 1,50,000. (v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan Account. 70,000 from Zs Capital Account will be transferred to his loan account and the balance will be paid to him by cheque.Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of X and Y after Zs retirement. On 28th February. What is gaining ratio? CA Parag Gupta is discussing retirement of partner chapter for Class 12 Students covering concept of gaining ratio and treatment of goodwill with journal ent. 50,000 respectively. Question 22 (A).A, B and C were partners sharing profits in the ratio of 6:4.5 Their capitals were A Rs. Sometimes, the share of profits is given to the retiring partner in lieu of goodwill. Anita, Gaurav and Sonu were partners in a firm sharing profits and losses in proportion to their capitals. B died on June 15, 2017. Suppose, a partner retires leaving Rs 30,000 due to him. Working Note:-Gaining Ratio of O = 2/3-2/6=2/6. The new profit sharing ratio of A and C will be A 3/5 and C 2/5. A partner, who goes out of a firm, is called retiring partner or outgoing partner. Question 102. 54,000Five months profit, i.e, from 1st April, 2018 to 31st August, 2018= Rs. Prepare Revaluation Account, Partners Capital Accounts, Ss Loan Account and Balance Sheet on 1-4 -2017. 10,970 = Rs. X, Y and Z are partners sharing profits in the ratio of 4 : 2 : 3. The balance sheet of the firm on 31st March, 2012 was as follows: D retired on that date subject to the following conditions: (1) The goodwill of the firm to be valued at Rs 180 thousand and D be given credit for his share of goodwill. The site owner may have set restrictions that prevent you from accessing the site. 15,000 in cash, through bank and the balance was to be transferred to his loan account. The sum that is attributable to his capital account credit.3.) (d) The provision for doubtful debts would be increased by Rs. 90,000 and necessary adjustments were to be made by bringing in or paying off cash as the case may be. As Share of Goodwill = Rs. P and Q are to provide such sum as will make their Capitals proportionate to their share of profits.Prepare necessary entries and the new balance sheet. (ii) Patents were valued at Rs. 35,00,000 2/5 = Rs. (d) Tripti withdrew Rs. 19,000;(b) Fixed assets were valued at Rs. 1,40,000 Rs. Adjustments/Accounting treatment required at the time of Retirement of a partner: Goodwill is a created intangible asset on the balance sheet, which is used to reduce the assets and liabilities of a business. 1,333Ys Share of Profit = Rs. A, B and C are partners sharing profits and losses in the ratio of 3/6 : 2/6 : 1/6. (iii) Bs share was taken up by A only. This is treated as intangible assets in accounts. 24,000 9/16 = Rs. 1,60,000 was suffered by the company this year. 4,00,000. 10,000; Machinery at Rs. Question 28. When Y dies, the new X:Z ratio is 5:2. (2) Total purchases will be calculated by making a Total Creditors Account. A, B and C are partners in a firm sharing profits in the ratio of 3 :2: 1. (b) Interest on capital at 12% per annum. (b) There was a claim for workmens compensation to the extent of Rs. The profit for the year ending 31st March, 2019 amounted to Rs. Calculate new ratio and gaining ratio. Content Filtrations 6. Question 63 (new). In the ledger, goodwill account appeared at Rs 1,00,000 but the partners agreed that the fair value of firms goodwill on the abovementioned date was Rs 4,75,000. In this case the goodwill relating to the retiring partner of 15,000 is recorded, the capital account of 75,000 is cleared and the retiring partner is paid the amount of 90,000 in cash. 70,000. 21,600. Question 19. 3,00,000 3/10 = Rs. (iv) The claim on account of Workmen Compensation Reserve was estimated at Rs. It should be noted that unless the question specifically says that goodwill account appearing in the books is to be kept intact, goodwill account should be completely written off before passing any other entry, It means that the first method is the preferred one. Basuda Ltd. retired from the partnership on 31st March. P, Q and R were partners in a firm sharing profits in the ratio of 2 : 3 :5. Calculation of Gaining Ratio: 2. (iii) That provision for doubtful debts be brought upto 5% on debtors. The payment to the retiring partner can now be recorded in one of two ways. (iv) Interest on capital will be provided at 10% p.a. The value of the firms goodwill is calculated, and then the share of the retiring partner in the goodwill is determined. 80,000; Rs. The Charlie after Laurels retirement can be ascertained by deducting liabilities from after Laurel is paid off. 20,000) and 2018 (Profits Rs. 95,000.Pass journal entries, give capital accounts and the balance sheet of the remaining partners. R retires and his share is taken by P and Q in the ratio of 2:1. Accounting Treatment of Goodwill in case of Admission of Partner As per the AS 10, we shall record Goodwill in the books only when some consideration in money or money's worth has been paid for it. 96,000. Question 26 (new). On the retirement of C, goodwill is valued at Rs. (iii) Measurement of the firms goodwill and accounting care.iv) Asset and obligation revaluation. New share of Y = 2/6+1/8= (8 + 3)/24=11/24, New share of Z = 1/6+1/8= (4 + 3)/24=7/24.

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