Atul, Madan and Mohan sharing profits and Losses in the ratio of 3 : 2 : 1 decide to share profits and losses equally w.e.f 1st April, 2023. Their Balance Sheet shows investment (at cost) at ₹ 3,50,000 and Investment Fluctuation Reserve at ₹ 60,000.
Atul, Madan and Mohan sharing profits and Losses in the ratio of 3 : 2 : 1 decide to share profits and losses equally w.e.f 1st April, 2023. Their Balance Sheet shows investment (at cost) at ₹ 3,50,000 and Investment Fluctuation Reserve at ₹ 60,000. What will be the accounting treatment when there is no other information?
a) Investment Fluctuation Reserve ₹ 60,000 will be credited to all partners in their old profit sharing ratio.
b) Investment Fluctuation Reserve ₹ 60,000 will be debited to all partners in their old profit sharing ratio.
c) Investment Fluctuation Reserve ₹ 60,000 will be credited to all partners in their new profit sharing ratio.
d) Investment Fluctuation Reserve will not be distributed.
Anurag Pathak Changed status to publish May 7, 2023
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.
Anurag Pathak Changed status to publish May 7, 2023
