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RECONSTITUTION OF A PARTNERSHIP FIRM-ADMISSION OF A PARTNER - Coggle…
RECONSTITUTION OF A PARTNERSHIP FIRM-ADMISSION OF A PARTNER
METHODS OF RECONSTITUTION
*Change in profit sharing ratio
*Retirement of existing partner
*Admission of new partner
*Death of a partner
Sacrificing Ratio=Old Profit Sharing Ratio-New Profit Sharing Ratio
Treatment of Reserves, Past profits or Losses and Revaluation: Distributed among old partners in old profit sharing ratio by transferring to their capital accounts
Goodwill (Methods of Valuation)
*Super Profits Method
*Capitalisation Method
*Average Profits Method
Preparation of Revaluation Account
Debit Items
Decrease in Assets
Increase in Liabilities
Credit Items
Increase in Assets
Decrease in Liabilities
Treatment of Premium for Goodwill: Distributed among old partners in Sacrificing sharing ratio by transferring to their capital accounts