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What adjustments are mainly done at the time of admission of a new partner?
(i) Adjustment in Profit sharing ratio
(ii) Goodwill
(iii) Accumulated profits, Reserves and losses
(i) Adjustment in Profit sharing ratio
(ii) Goodwill
(iii) Accumulated profits, Reserves and losses
- a)Only (i) and (ii)
- b)Only (i)
- c)All (i), (ii) and (iii)
- d)Only (ii)
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
What adjustments are mainly done at the time of admission of a new par...
Adjustments to be done at the time of admission of a partner are:
1.Change in profit sharing ratio
2.Adjustment for premium for goodwill
3.Adjustment of old goodwill (given in balance sheet)
4.Revaluation account (revaluation of assets and re-assessment of liabilities)
5.Accumulated profits and reserves
6.Adjustment of capital
1.Change in profit sharing ratio
2.Adjustment for premium for goodwill
3.Adjustment of old goodwill (given in balance sheet)
4.Revaluation account (revaluation of assets and re-assessment of liabilities)
5.Accumulated profits and reserves
6.Adjustment of capital
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What adjustments are mainly done at the time of admission of a new par...
Adjustments at the time of admission of a new partner:
Adjustments made at the time of admission of a new partner include the following:
Adjustment in Profit sharing ratio:
- One of the main adjustments made is the change in the profit sharing ratio among the existing partners and the new partner. This is done to reflect the new partner's contribution to the business.
Goodwill:
- The value of goodwill is also adjusted at the time of admission of a new partner. Goodwill can be either valued and brought into the books or written off completely depending on the agreement among the partners.
Accumulated profits, Reserves and losses:
- Another adjustment that is made is in accumulated profits, reserves, and losses. These need to be adjusted to reflect the new profit sharing ratio and the new partner's entitlement to these amounts.
Therefore, all three adjustments - profit sharing ratio, goodwill, and accumulated profits, reserves, and losses are mainly done at the time of admission of a new partner.
Adjustments made at the time of admission of a new partner include the following:
Adjustment in Profit sharing ratio:
- One of the main adjustments made is the change in the profit sharing ratio among the existing partners and the new partner. This is done to reflect the new partner's contribution to the business.
Goodwill:
- The value of goodwill is also adjusted at the time of admission of a new partner. Goodwill can be either valued and brought into the books or written off completely depending on the agreement among the partners.
Accumulated profits, Reserves and losses:
- Another adjustment that is made is in accumulated profits, reserves, and losses. These need to be adjusted to reflect the new profit sharing ratio and the new partner's entitlement to these amounts.
Therefore, all three adjustments - profit sharing ratio, goodwill, and accumulated profits, reserves, and losses are mainly done at the time of admission of a new partner.
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What adjustments are mainly done at the time of admission of a new partner?(i) Adjustment in Profit sharing ratio(ii) Goodwill(iii) Accumulated profits, Reserves and lossesa)Only (i) and (ii)b)Only (i)c)All (i), (ii) and (iii)d)Only (ii)Correct answer is option 'C'. Can you explain this answer?
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