Death of a Partner Video Lecture | Study Principles and Practice of Accounting - CA Foundation | Best Video for CA Foundation

next death of a partner the adjustments
involved in case of death of a partner
are very similar to that of a retirement
the area of difference let us see what
are the adjustments again in case of
death of a partner the remaining
partners stand to gain on death of a
partner what happens is the amount which
is due to the partner on account of his
capital on account of his share of
goodwill on account of the joint life
policy on account of revalued profits
and losses all this has to be
transferred to his executors account to
the account of the executors who are the
executors executors are the persons who
will execute the will of the dead
partner who will protect who will see
that all taxes etcetera paid from the
property and ensure the property all
that belongs to the partner is
transferred to the legal heirs now the
adjustments similar to the retirement or
that we need the Geylang ratio we will
find out the share of goodwill there
will be revaluation of assets and
liabilities and the share of accumulated
problems and losses will be that all
these are same as a retirement this
another area of difference however is
that retirement is often at the end of a
particular year he can time his
retirement that he retires at the end of
the year on 31st March
whenever the accounts are being closed
so very often retirement is usually at
the end of a financial year but death is
sudden it can happen anytime during the
year and there is an additional thing
that we need to do find out the profit
in the current year up to the date of
death profit in the current year up to
the date of death now it may not
possible to know the profit in order to
ascertain profit closing stock may have
to be valued etc so what is normally
done is that on the basis of the
previous year's profit we assume the
profits would be similar or if there has
been a trend we take we make an
estimation roughly of the profit which
is expected during the current year and
therefore what could be the profit
estimated profit up to the date of death
in the current day the share of the
deceased partner in this current year's
estimated profit is credited to his
capital account this is new there is of
course again joint life policy only on
the death of a partner the amount which
is received from the insurance company
is not the surrender value but the
actual the policy amount because the
policy has matured on the death of any
one of the partners we like the policy
with nature and there is of course the
final payment which is made to the
executors of the account so distinction
between retirement and death is that in
case of retirement the amount is paid to
the retiring partner either cash is paid
off or transferred to a loan account but
in case of death
this amount becomes payable to the
executors of the deceased partner the
people who are responsible for the two
properties person who are responsible to
execute the will of the deceased partner
and we need to ascertain the profit in
the current year up to the date of death
also the joint life policy will mature
and the amount received is the the
amount received is the policy amount not
be sir
that surrender value but accounting
entries and treatment thereafter is the
same