General reserve will be distributed among partners at the time of admi...
General Reserve Distribution among Partners at the Time of Admission of New Partner
When a new partner is admitted to a partnership firm, the existing partners may decide to distribute the general reserve amongst themselves. The distribution can be done in the following ways:
1. Old Ratio
If the general reserve is distributed among the existing partners in the old ratio, then the distribution will be based on the profit-sharing ratio of the partners before the admission of the new partner. This means that the partners will receive the general reserve in the same proportion as their existing profit-sharing ratio.
2. New Ratio
If the general reserve is distributed among the partners in the new ratio, then the distribution will be based on the revised profit-sharing ratio after the admission of the new partner. This means that the partners will receive the general reserve in the proportion of their new profit-sharing ratio.
3. Equally
The general reserve can also be distributed equally among all the partners, irrespective of their profit-sharing ratio. In this case, each partner will receive an equal share of the general reserve.
Conclusion
In conclusion, the distribution of general reserve among partners at the time of admission of a new partner can be done in various ways. The decision of distribution is usually taken by the existing partners and is based on their mutual agreement. The distribution of general reserve helps to maintain the financial stability of the partnership firm and ensures that the new partner is aware of the financial position of the firm.
General reserve will be distributed among partners at the time of admi...
The general reserve will be distributed among partners at the time of admission of new partner in the old ratio...
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