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Ans – a) If there is no reduction in the market value of the Investment. The Investment Fluctuation Reserve is distributed among partners in their old profit-sharing ratio.
Ans – b) Solution:- Calculation of Sacrifice/gain of partners Old Ratio = 5 : 4 : 1 New Ratio = 1 : 1 : 1 P = 5/10 – 1/3 = 15 – 10/30 = 5/30 Q = 4/10 –…
Ans – d) the existing agreement changes as it results in a gain of additional share in future profits for some partners while a loss of a part thereof for other partners. Both Assertion and Reason are correct and reason…
Ans – b) When there is a change in the agreement of partners, new partnership agreement is prepared, however firm exist is called reconstitution of partnership
In case of a change in the profit-sharing ratio, the accumulated profits can be distributed in two cases. Case – 1 When accumulated profits are not to be shown in the new Balance Sheet. In this case, Accumulated profit is…
The reason for the revaluation of assets and reassessment of liabilities is that any increase or decrease in the value of assets and liabilities up to the date of the change in the profit-sharing ratio is for the period before…
A firm is reconstituted on: i) Change in the profit-sharing ratio among the existing partners. ii) admission of a new partner or partner
Whenever there is a change in the relationship of partners, i.e., a change in the terms of the agreement, it results in the reconstitution of the firm. In other words, Any change in the existing agreement of partnership is the…
Ans – a) Explanation:- At the time of change in profit sharing ratio, gaining partner brings his share of goodwill to compensate the sacrificing partner. Thus, Assertion is correct. The gaining partner may or may not brings goodwill in cash…
Ans – d) Explanation:- At the time of change in the profit sharing ratio, the goodwill of the firm is valued. The sacrificing partners are compensated by the gaining partners. thus assertion (A) is incorrect and Reason (R) is correct.