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Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdish’s capital accounts will be debited by:
- a)Rs. 15,000 and Rs. 10,000 respectively
- b)Rs. 10,000 and Rs. 15,000 respectively
- c)Rs. 20,000 and Rs. 5,000 respectively
- d)Rs. 5,000 and Rs. 20,000 respectively
Correct answer is option 'B'. Can you explain this answer?
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Om, Jai and Jagdish are par tners sharing profits and losses in the ra...
Adjustment of Goodwill on Retirement of a Partner in a Partnership Firm
Partnership firms may face changes in their partnership agreement due to various reasons like retirement, admission, or death of a partner. In such cases, the existing partners need to adjust the accounts and share the profits or losses according to the new agreement.
In this question, Om is retiring from the partnership, and Jai and Jagdish will continue the business. The new profit-sharing ratio will be equal, which means they will share the profits and losses in the same proportion.
Valuation of Goodwill
Goodwill is an intangible asset that represents the value of a firm's reputation, customer base, brand name, and other non-physical assets. When a partner retires or a new partner is admitted, the value of goodwill needs to be adjusted in the accounts.
In this case, the value of goodwill is Rs. 50,000. The existing partners need to share this amount in their new profit-sharing ratio.
Calculation of New Profit-Sharing Ratio
The existing profit-sharing ratio is 5:3:2 for Om, Jai, and Jagdish, respectively. The new ratio will be equal for Jai and Jagdish, which means they will share the profits and losses in the same proportion.
Let the new ratio be x:x.
Total profit = 5x + 3x + 2x = 10x
Therefore, the new profit-sharing ratio will be 1:1.
Adjustment of Goodwill
To adjust the value of goodwill, Jai and Jagdish's capital accounts will be debited by a certain amount. The amount will be calculated based on the new profit-sharing ratio and the value of goodwill.
The formula for the amount to be debited is:
Amount to be debited = (New ratio – Old ratio) × Value of goodwill
For Jai:
Amount to be debited = (1/2 – 3/10) × 50,000 = Rs. 10,000
For Jagdish:
Amount to be debited = (1/2 – 1/5) × 50,000 = Rs. 15,000
Therefore, the correct answer is option B.
Conclusion
Adjustment of goodwill is a common practice in partnership firms when there is a change in the partnership agreement. The adjustment is made based on the new profit-sharing ratio and the value of goodwill. The existing partners need to share the goodwill amount in their new ratio, and their capital accounts are debited accordingly.
Partnership firms may face changes in their partnership agreement due to various reasons like retirement, admission, or death of a partner. In such cases, the existing partners need to adjust the accounts and share the profits or losses according to the new agreement.
In this question, Om is retiring from the partnership, and Jai and Jagdish will continue the business. The new profit-sharing ratio will be equal, which means they will share the profits and losses in the same proportion.
Valuation of Goodwill
Goodwill is an intangible asset that represents the value of a firm's reputation, customer base, brand name, and other non-physical assets. When a partner retires or a new partner is admitted, the value of goodwill needs to be adjusted in the accounts.
In this case, the value of goodwill is Rs. 50,000. The existing partners need to share this amount in their new profit-sharing ratio.
Calculation of New Profit-Sharing Ratio
The existing profit-sharing ratio is 5:3:2 for Om, Jai, and Jagdish, respectively. The new ratio will be equal for Jai and Jagdish, which means they will share the profits and losses in the same proportion.
Let the new ratio be x:x.
Total profit = 5x + 3x + 2x = 10x
Therefore, the new profit-sharing ratio will be 1:1.
Adjustment of Goodwill
To adjust the value of goodwill, Jai and Jagdish's capital accounts will be debited by a certain amount. The amount will be calculated based on the new profit-sharing ratio and the value of goodwill.
The formula for the amount to be debited is:
Amount to be debited = (New ratio – Old ratio) × Value of goodwill
For Jai:
Amount to be debited = (1/2 – 3/10) × 50,000 = Rs. 10,000
For Jagdish:
Amount to be debited = (1/2 – 1/5) × 50,000 = Rs. 15,000
Therefore, the correct answer is option B.
Conclusion
Adjustment of goodwill is a common practice in partnership firms when there is a change in the partnership agreement. The adjustment is made based on the new profit-sharing ratio and the value of goodwill. The existing partners need to share the goodwill amount in their new ratio, and their capital accounts are debited accordingly.
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Community Answer
Om, Jai and Jagdish are par tners sharing profits and losses in the ra...
The Partners are in ratio 5:3:2(old ratio) and the new ratio of Jai and Jagdish is 1:1 and therefore their gain ratio is 2:3 and share of Om is 1/2 and therefore 25000 will be distributed in ratio 1:3 that is 10000 and 15000
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Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer?
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Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer?.
Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? for CA CPT 2024 is part of CA CPT preparation. The Question and answers have been prepared according to the CA CPT exam syllabus. Information about Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA CPT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA CPT.
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Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Om, Jai and Jagdish are par tners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdishs capital accounts will be debited by:a)Rs. 15,000 and Rs. 10,000 respectivelyb)Rs. 10,000 and Rs. 15,000 respectivelyc)Rs. 20,000 and Rs. 5,000 respectivelyd)Rs. 5,000 and Rs. 20,000 respectivelyCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice CA CPT tests.
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