Accountancy class 12 Retirement of a partner notes
Retirement of a partner.... Short & Easy Notes for Board Exam
=> following items are included in calculating the total amount to be paid to retiring partner;
Amount to be added;
(i) Balance of his capital A/c and current A/c as in the last balance sheet.
(ii) His share in undistributed profit.
(iii) His share in reserve.
(iv) Interest on capital.
(v) Outstanding salary.
(vi) Profit on revaluation of assets and liabilities.
(vii) His share in profit up to date of retirement.
Amount to be deducted;
(i) His share in undistributed loss.
(ii) Loss on revaluation of assets and liabilities.
(iii) Loan, if any from the firm.
(iv) Share in goodwill, if appear in the balance sheet.
#2. What do you mean by retirement of a partner? How can a partner retire? Write the provision for retirement?
=> A partner has the right of retiring from the firm by giving suitable notice when a partner break his relationship from the partnership, he is said to have retire from the business.
Provision of retirement(As per mentioned in Indian Partnership Act,1932);
I. With the consent of all other partners.
II. Any express agreement between the partners.
III. In case of partnership at-will, by giving notice in writing to all other partners of his intention of retire.
#3. Describe the accounting treatment of goodwill at the time of retirement, as per AS-26.
=> Accounting treatment of goodwill (AS-26);
Step 1- Find-out the share of outgoing partner in goodwill.
Step 2- Following entries are passed for his share of goodwill;
Gainer Partner's capital A/c....Dr
To Sacrificing partner's capital A/c.
(being adjustment made for goodwill)
Step 3- If any goodwill appear in the balance sheet.
All partner's capital A/c....Dr
To Goodwill A/c
(being goodwill written-off in old ratio)
#ACCOUNTING STANDARD - 26 ARE MANDATORY IN NATURE AND MUST BE FOLLOWED STRICTLY
THE END
 |
| GOODWILL |
Comments
Post a Comment