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P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.?
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P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in ...
Understanding Capital Profit and Revenue Profits
To assess the capital profit and revenue profits for P Ltd's acquisition of Q Ltd, we need to analyze the profit and loss accounts.

Initial Losses
- On 1.4.12, Q Ltd had a debit balance (loss) of Rs. 40,000 in the profit and loss account.

Final Balance
- As of 31.3.13, Q Ltd showed a credit balance (profit) of Rs. 1,20,000.

Calculation of Total Profits
1. **Total Profit Calculation:**
- Final Credit Balance: Rs. 1,20,000
- Initial Debit Balance: Rs. 40,000
- Total Profit: Rs. 1,20,000 + Rs. 40,000 = Rs. 1,60,000

Classification of Profits
2. **Identification of Capital and Revenue Profits:**
- Capital Profit: This generally refers to gains that are not derived from the regular business operations. Since P Ltd acquired 65% of Q Ltd, any profits realized from the acquisition in terms of premium or goodwill must be classified as capital profits.
- Revenue Profit: These are profits generated from the operational performance of the company. The revenue profit can be derived from the profits generated during the operational period.

Final Breakdown
- **Revenue Profit:**
- Total Profit: Rs. 1,60,000
- Less Initial Loss: Rs. 40,000
- Revenue Profit: Rs. 1,20,000
- **Capital Profit:**
- Capital Profit is typically considered as the difference in the valuation of acquired shares over their book value at the time of acquisition, which requires additional information not provided here.
In conclusion, while the revenue profits can be calculated clearly, the capital profit requires more details about the acquisition valuation.
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A, B and C are partners sharing profits and losses in the ratio of 2 : 1 : 1 respectively.On 31st March, 2012, their balance sheet was as follows:A died on 1st April, 2012. The firm had taken a joint life policy for Rs 1,20,000, the payment for which was received by the firm. According to the partnership deed, on retirement or death of a partner, the goodwill of the firm was to be valued at 1½ times of the average profit for the last four years.The profits for the last four years were Rs 64,000, Rs 69,000, Rs 72,000 and Rs 75,000 respectively. For paying the amount due to A’s legal representative, B and C brought as much cash as would bring their capitals in profit sharing ratio and the firm would have a cash balance of Rs 3,000.Pass journal entries to record the above mentioned transactions and prepare partners’ capital accounts. in this question how b capital become 88750 and c capital will become 68750?

A, B and C are partners sharing profits and losses in the ratio of 2 : 1 : 1 respectively.On 31st March, 2012, their balance sheet was as follows:A died on 1st April, 2012. The firm had taken a joint life policy for Rs 1,20,000, the payment for which was received by the firm. According to the partnership deed, on retirement or death of a partner, the goodwill of the firm was to be valued at 1½ times of the average profit for the last four years.The profits for the last four years were Rs 64,000, Rs 69,000, Rs 72,000 and Rs 75,000 respectively. For paying the amount due to A’s legal representative, B and C brought as much cash as would bring their capitals in profit sharing ratio and the firm would have a cash balance of Rs 3,000.Pass journal entries to record the above mentioned transactions and prepare partners’ capital accounts.?

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P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.?
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P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.?.
Solutions for P Ltd acquired 65% shares of Q Ltd. On 1.10.12 profit and loss a/c in the books of Q Ltd. Showed a debit balance of Rs. 40,000 on 1.4.12. On 31.3.13, the balance sheet of Q Ltd. Showed profit and loss a/c credit balance of Rs. 1,20,000. Calculate capital profit and revenue profits.? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
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