DK Goel Solutions Chapter 5 Retirement or Death of a Partner

1. DK Goel Solutions Chapter 5 Retirement or Death of a Partner DK Goel Solutions Chapter 5 Retirement or Death of a Partner, which is laid out by master Accountancy instructors from the most recent form of DK Goel Class 12 Accountancy books. We, at Dk Goel Solutions help students to fathom every one of the hypotheses, specifically. There are various ideas in Accountancy, however the ideas of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required. DK Goel Solutions Class 12 – Chapter 5 Question 1. Why a retiring or deceased partner is entitled to a share of goodwill of the firm? Solution 1 The product of the contributions of all current collaborators in the past is goodwill received by the organization. A percentage of potential gains will accrue regardless of the current goodwill and future earnings will not be shared by the retired or deceased partner. The surviving partners should then reward the retired or deceased partner by entitling him or her to a share of the goodwill of the company. Question 2. Discuss the method of treatment of goodwill at the time of retirement of a partner. Solution 2 The handling of a partner’s goodwill at the time of retirement can be achieved in the capital account of the partner. The capital account of the retired or dead partner will be paid with his share of goodwill and the capital account of the continuing partner will be debited into their earnings ratio. Journal Entry

2. Continuing Partner’s Capital A/cs Dr. (Gaining ratio) To Retiring/ Deceased Partner’s Capital A/c (Share of goodwill) (Retirement/deceased partner’s goodwill share In the acquiring percentage, tailored to on going partners) Question 3. What are the adjustments require on retirement of a partner from the firm? Solution 3 The following modifications include the retirement of a partner from the company: (i) Calculate the current percentage of gains for all other partners. (ii) The new ratio of the remaining partners is determined. (iii) Measurement of the firm’s goodwill and accounting care. iv) Asset and obligation revaluation. (v) Sharing between all partners of combined gains and losses and reserves. (vi) Shared Life Strategy Treatment. (vii) Settlement of the balance due to the spouse retiring. (iii) profit-sharing ratio. Transfer of the remaining partners’ capital accounts to a current Question 4. What is gaining ratio? How is it calculated at the time of the retirement of a partner? Solution 4

3. The gaining ratio is the ratio in which the on-going partners receive the share of the withdrawing partner. It is determined by deducting the old proportion from the current proportion. Formula for Calculating Gaining Ratio: Gaining ratio = New ratio – Old ratio. Question 5. Give any three points of distinction between sacrificing ratio and gaining ratio. Solution 5 Question representative of a deceased partner? 6. How would you calculate the amount payable to the Solution 6 The deceased partner’s legal executive is entitled to the balance number of the capital account of the deceased partner. The following things are posted in the deceased partner’s capital account on the debit side: (a) Credit balance in a capital account or current account of the deceased spouse. (b) The profit share of the deceased spouse up to the date of his or her death. (c) The share of goodwill of the deceased partner.

4. (d) The share of the deceased spouse in the net reserves and the taxable account. (e) The share of the deceased partner in the gains from the revaluation of assets and liabilities. (f) The share of the deceased partner in the shared life policy. (g) Capital interest and salary or commission, if any, before the date of death. The following things are posted on the credit side of the deceased partner’s capital account: (a) Debit balance for the capital account and current account of the deceased partner. (b) The sum withheld in the form of drawings before the day of the partner’s death. (c) Curiosity in paintings up to the date of death, if any. (d) The proportion of losses of the deceased partner in the revaluation of assets and liabilities. (e) The share of the loss of the deceased spouse up to the date of death. (f) The dead partner’s share of the company’s cumulative damages. Question 7. If a partner dies during the year, how will you find out the share of profit of the deceased partner? Solution 7 The executors of the deceased partner shall now be entitled to the share of earnings gained by the company from the beginning of the year until the day of his death if the death of the partner occurred on any day during the year. From any of the following methods, such benefit can be determined: (a) Dependent on Time.

5. (b) On a revenue or turnaround basis. Question 8. Name five items which are credited to the account of a deceased partner while calculating the amount due to his legal representatives. Solution 8 The products that are attributed to a deceased partner’s account when determining the balance owed to his legal representatives:- 1.) His share of the increase in the appreciation of the company’s goodwill. 2.) The sum that is attributable to his capital account credit. 3.) If given in the partnership deed, interest on money. 4.) His share of gains on asset and obligation revaluation. 5.) His share of the benefit or reserves that are undistributed

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