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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.
Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.
- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false .
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A)...
The gaining partner transfers the amount of goodwill to the retiring or deceased partners in proportion in order to compensate for the sacrificed goodwill as per the gaining ratio.
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Directions : In the following questions, a statement of Assertion (A)...
Assertion and Reasoning in Accounting: Treatment of Goodwill
Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.
Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.
Explanation:
Goodwill is an intangible asset that arises when a business is sold for a price higher than the fair value of its net assets. It represents the value of the business's reputation, customer base, and other intangible factors that contribute to its earning capacity. In a partnership, goodwill is shared among the partners based on their profit-sharing ratio. When a partner retires or dies, his share of goodwill needs to be settled.
The assertion is correct. When goodwill is not appearing in the books, it means that it is not separately recorded as an asset in the balance sheet. In such cases, the retiring or deceased partner's capital account is credited with his share of goodwill, which is equal to the goodwill balance in the books divided by the total number of partners. This is because the retiring partner is entitled to his share of the firm's goodwill, and it needs to be paid to him.
The reasoning is also correct. Goodwill needs to be compensated by the gaining partners in the gaining ratio. When a partner retires or dies, the remaining partners continue to run the business, and they benefit from the goodwill generated by the business. Therefore, they need to compensate the retiring or deceased partner for his share of goodwill. This is done by debiting the gaining partners' capital accounts in the gaining ratio. This reduces the remaining partners' capital and reflects the fact that they are paying for the retiring or deceased partner's share of goodwill.
Conclusion:
Both the assertion and reasoning are correct, and the reasoning is the correct explanation of the assertion. Therefore, option (A) is the correct answer.
Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.
Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.
Explanation:
Goodwill is an intangible asset that arises when a business is sold for a price higher than the fair value of its net assets. It represents the value of the business's reputation, customer base, and other intangible factors that contribute to its earning capacity. In a partnership, goodwill is shared among the partners based on their profit-sharing ratio. When a partner retires or dies, his share of goodwill needs to be settled.
The assertion is correct. When goodwill is not appearing in the books, it means that it is not separately recorded as an asset in the balance sheet. In such cases, the retiring or deceased partner's capital account is credited with his share of goodwill, which is equal to the goodwill balance in the books divided by the total number of partners. This is because the retiring partner is entitled to his share of the firm's goodwill, and it needs to be paid to him.
The reasoning is also correct. Goodwill needs to be compensated by the gaining partners in the gaining ratio. When a partner retires or dies, the remaining partners continue to run the business, and they benefit from the goodwill generated by the business. Therefore, they need to compensate the retiring or deceased partner for his share of goodwill. This is done by debiting the gaining partners' capital accounts in the gaining ratio. This reduces the remaining partners' capital and reflects the fact that they are paying for the retiring or deceased partner's share of goodwill.
Conclusion:
Both the assertion and reasoning are correct, and the reasoning is the correct explanation of the assertion. Therefore, option (A) is the correct answer.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?.
Solutions for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).c)Assertion (A) is true, but Reason (R) is false .d)Assertion (A) is false, but Reason (R) is true.Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
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