Nature of Partnership

Partnership is a form of business organization in which two or more persons come together to carry on a business with the aim of making a profit. The partnership can be formed by an agreement between the partners, and the agreement can be written or oral.

Partnership is a popular form of business organization because it has many advantages, such as the ability to pool resources and share risks. Partnerships are also flexible and can be adapted to suit the needs of the partners.

Admission of a New Partner

When a new partner is admitted to a partnership, the existing partners must agree on the terms of admission. The new partner may contribute capital or other assets to the partnership, and the partners must decide how to value these assets.

Valuation of Assets and Liabilities

In the case of A and B, they admitted C into the partnership. At the time of admission, the assets and liabilities were valued as follows:

- The plant was depreciated by 20%
- The book value of the plant was 1,50,000

The depreciation of the plant means that the value of the plant has decreased over time. The book value of the plant is the value of the plant as recorded in the books of accounts.

Sharing of Profit and Loss

A and B were partners in a firm and shared the profit and loss in the ratio of 3:2. This means that A would receive three parts of the profit and B would receive two parts of the profit. Similarly, if there was a loss, A would bear three parts of the loss, and B would bear two parts of the loss.

Conclusion

In conclusion, partnership is a form of business organization that allows two or more persons to come together to carry on a business with the aim of making a profit. When a new partner is admitted to a partnership, the existing partners must agree on the terms of admission, including the valuation of assets and liabilities. The sharing of profit and loss is also an important aspect of partnership.