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Goodwill of the firm be valued at RS. 8000, PSR is 3:3:2. What will be done? In reconstitution of partnership in retirement?
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Goodwill of the firm be valued at RS. 8000, PSR is 3:3:2. What will be...
Reconstitution of Partnership in Retirement


In the reconstitution of partnership in retirement, the retiring partner's share in the firm's goodwill needs to be valued and settled. The given information states that the goodwill of the firm is valued at Rs. 8000, and the profit-sharing ratio (PSR) is 3:3:2 among the remaining partners.


Step 1: Calculate the Retiring Partner's Share in Goodwill


  • First, determine the total profit-sharing ratio of the remaining partners. In this case, it is 3 + 3 + 2 = 8.

  • Next, calculate the retiring partner's share in the goodwill by multiplying the total goodwill value by the retiring partner's share in the PSR.

  • Retiring partner's share in goodwill = (Retiring partner's share in PSR / Total PSR) * Total goodwill

  • Retiring partner's share in goodwill = (2 / 8) * 8000 = Rs. 2000



Step 2: Settlement of Retiring Partner's Share in Goodwill


  • The retiring partner is entitled to receive the value of their share in the firm's goodwill.

  • The remaining partners will contribute towards settling the retiring partner's share in goodwill.

  • The amount contributed by each remaining partner will be proportional to their profit-sharing ratio.



Step 3: Calculate New Profit-Sharing Ratio


  • After the retirement of a partner, the profit-sharing ratio among the remaining partners needs to be adjusted.

  • The new PSR is calculated by deducting the retiring partner's share from the existing PSR.

  • In this case, the new PSR would be 3:3:2 minus 2:0:0 (retiring partner's share).

  • The new PSR would be 1:3:2 among the remaining partners.



Step 4: Adjustments in Capital Accounts


  • The retiring partner's capital account will be closed by transferring their share in the goodwill to their capital account.

  • The remaining partners' capital accounts will be adjusted to reflect the new PSR.

  • Any necessary cash or assets may be transferred between the partners to maintain the capital accounts in accordance with the new PSR.



By following these steps, the retirement of a partner can be properly reconstituted, ensuring the valuation and settlement of the retiring partner's share in the firm's goodwill, as well as adjusting the profit-sharing ratio and capital accounts among the remaining partners.
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Goodwill of the firm be valued at RS. 8000, PSR is 3:3:2. What will be...
New psr 3:3:2 hai kya?
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Goodwill of the firm be valued at RS. 8000, PSR is 3:3:2. What will be done? In reconstitution of partnership in retirement?
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