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A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firm
- a)A and B will share goodwill bought by C as 4,000:1,000.
- b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.
- c)Both.
- d)None.
Correct answer is option 'B'. Can you explain this answer?
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A and B are partners sharing the profit in the ratio of 3:2. They take...
Explanation:
Adjustment of Goodwill:
- In this scenario, since C is unable to bring the full amount of goodwill as agreed upon, the amount of Rs. 10,000 will need to be adjusted in the books of the firm.
- The adjustment will be made in the sacrificing ratio, which is the ratio in which the existing partners (A and B) are willing to give up their share of profits to accommodate the new partner (C).
Calculation of Sacrificing Ratio:
- A and B's original profit sharing ratio is 3:2. Therefore, their sacrificing ratio will be calculated as 2/(2+3) = 2/5.
- Since C is unable to bring Rs. 10,000 against goodwill, this amount will be shared by A and B in their sacrificing ratio.
- The amount of Rs. 10,000 will be adjusted in the ratio of 2:3 between A and B, respectively. This means A will bear Rs. 4,000 (2/5 * 10,000) and B will bear Rs. 6,000 (3/5 * 10,000).
Final Adjustment:
- The goodwill not brought by C, amounting to Rs. 10,000, will be adjusted in the books of the firm in the above-mentioned ratios.
- This adjustment ensures that the new partner's inability to bring the full amount of goodwill does not unfairly burden the existing partners and maintains fairness in the profit sharing arrangement.
Adjustment of Goodwill:
- In this scenario, since C is unable to bring the full amount of goodwill as agreed upon, the amount of Rs. 10,000 will need to be adjusted in the books of the firm.
- The adjustment will be made in the sacrificing ratio, which is the ratio in which the existing partners (A and B) are willing to give up their share of profits to accommodate the new partner (C).
Calculation of Sacrificing Ratio:
- A and B's original profit sharing ratio is 3:2. Therefore, their sacrificing ratio will be calculated as 2/(2+3) = 2/5.
- Since C is unable to bring Rs. 10,000 against goodwill, this amount will be shared by A and B in their sacrificing ratio.
- The amount of Rs. 10,000 will be adjusted in the ratio of 2:3 between A and B, respectively. This means A will bear Rs. 4,000 (2/5 * 10,000) and B will bear Rs. 6,000 (3/5 * 10,000).
Final Adjustment:
- The goodwill not brought by C, amounting to Rs. 10,000, will be adjusted in the books of the firm in the above-mentioned ratios.
- This adjustment ensures that the new partner's inability to bring the full amount of goodwill does not unfairly burden the existing partners and maintains fairness in the profit sharing arrangement.
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A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer?
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A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer?.
A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring only his share of Capital. How this will be treated in the books of the firma)A and B will share goodwill bought by C as 4,000:1,000.b)Goodwill not brought, will be adjusted to the extent of Rs.10,000 in sacrificing ratio.c)Both.d)None.Correct answer is option 'B'. Can you explain this answer?.
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