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Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners?
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Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 f...
Introduction
When partners in a firm change their profit-sharing ratio, it often involves the re-evaluation and distribution of goodwill. In this case, Ram, Sham, and Mohan, who initially shared profits in the ratio of 5:3:2, decided to change their ratio to equal shares. The firm's goodwill is valued at 2,40,000.
Goodwill Valuation
- The total goodwill of the firm is 2,40,000.
- Since the partners are changing their profit-sharing ratio, they must account for this goodwill.
Old Profit Sharing Ratio
- Ram: 5 parts
- Sham: 3 parts
- Mohan: 2 parts
New Profit Sharing Ratio
- Ram: 1/3
- Sham: 1/3
- Mohan: 1/3
Calculation of Goodwill Distribution
1. Calculate the total shares in the old ratio:
- Total parts = 5 + 3 + 2 = 10 parts
2. Calculate the share of goodwill for each partner in the old ratio:
- Ram's share of goodwill = (5/10) * 2,40,000 = 1,20,000
- Sham's share of goodwill = (3/10) * 2,40,000 = 72,000
- Mohan's share of goodwill = (2/10) * 2,40,000 = 48,000
3. Calculate the adjustment needed due to the new ratio:
- Each partner will now have a share of goodwill = 2,40,000 / 3 = 80,000
Adjustment Entries
- Ram must pay Sham and Mohan:
- To Sham: 80,000 - 72,000 = 8,000
- To Mohan: 80,000 - 48,000 = 32,000
- Sham and Mohan will receive their respective amounts to adjust to the new ratio.
Conclusion
The adjustment of goodwill ensures that partners fairly compensate one another for the change in profit-sharing arrangement, maintaining equity and harmony within the partnership.
When partners in a firm change their profit-sharing ratio, it often involves the re-evaluation and distribution of goodwill. In this case, Ram, Sham, and Mohan, who initially shared profits in the ratio of 5:3:2, decided to change their ratio to equal shares. The firm's goodwill is valued at 2,40,000.
Goodwill Valuation
- The total goodwill of the firm is 2,40,000.
- Since the partners are changing their profit-sharing ratio, they must account for this goodwill.
Old Profit Sharing Ratio
- Ram: 5 parts
- Sham: 3 parts
- Mohan: 2 parts
New Profit Sharing Ratio
- Ram: 1/3
- Sham: 1/3
- Mohan: 1/3
Calculation of Goodwill Distribution
1. Calculate the total shares in the old ratio:
- Total parts = 5 + 3 + 2 = 10 parts
2. Calculate the share of goodwill for each partner in the old ratio:
- Ram's share of goodwill = (5/10) * 2,40,000 = 1,20,000
- Sham's share of goodwill = (3/10) * 2,40,000 = 72,000
- Mohan's share of goodwill = (2/10) * 2,40,000 = 48,000
3. Calculate the adjustment needed due to the new ratio:
- Each partner will now have a share of goodwill = 2,40,000 / 3 = 80,000
Adjustment Entries
- Ram must pay Sham and Mohan:
- To Sham: 80,000 - 72,000 = 8,000
- To Mohan: 80,000 - 48,000 = 32,000
- Sham and Mohan will receive their respective amounts to adjust to the new ratio.
Conclusion
The adjustment of goodwill ensures that partners fairly compensate one another for the change in profit-sharing arrangement, maintaining equity and harmony within the partnership.
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Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners?
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Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners?.
Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ram sham and mohan were partner in a firm sharing profit ratio 5:3:2 from 1 April 2013 they decided profit sharing ratio equally. the goodwill firm 2,40,000 and divide the goodwill all partners?.
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