Download CBSE Class 12 Accountancy Reconstitution Of Partnership Notes in PDF format. All Revision notes for Class 12 Accountancy have been designed as per the latest syllabus and updated chapters given in your textbook for Accountancy in Class 12. Our teachers have designed these concept notes for the benefit of Class 12 students. You should use these chapter wise notes for revision on daily basis. These study notes can also be used for learning each chapter and its important and difficult topics or revision just before your exams to help you get better scores in upcoming examinations, You can also use Printable notes for Class 12 Accountancy for faster revision of difficult topics and get higher rank. After reading these notes also refer to MCQ questions for Class 12 Accountancy given on studiestoday
Revision Notes for Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner
Class 12 Accountancy students should refer to the following concepts and notes for Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner in Class 12. These exam notes for Class 12 Accountancy will be very useful for upcoming class tests and examinations and help you to score good marks
Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner Notes Class 12 Accountancy
CHAPTER 3
Reconstitution of Partnership
Meaning of Reconstitution:
Any change in agreement of partnershipis called reconstitution of partnership firm. In following circumstances a partnership firm may be reconstituted:
1. Change in Profit Sharing Ratio
2. Admission of a partner
3. Retirement/Death of a partner
Change in profit sharing ratio among the existing partners
Meaning:
When all the partners of a firm agree to change their profit sharing ratio, the ratio may be changed. In this case one profit is purchasing a share of partner from another one. In other words, share of one partner may increase and share of another partner may decrease.
Accounting treatment of goodwill:
In case of change in profit sharing ratio, the gaining partner must compensate the sacrificing partner by paying the proportionate amount of goodwill.
Illustration 1 Amit and Kajal were partners in a firm sharing profits in the ratio of 3:2. With effect from January 1,2012 they agreed to share profits equally. For this purpose the goodwill of the firm was valued at ‘60,000. Pass the necessary journal entry.
Accounting treatment of Reserves and Accumulated Profits: Case (i) When reserves and accumulated profits/losses are to be distributed At the time of change in profit sharing ratio, if there are some reserves or accumulated profits/losses existing in the books of the firm, these should be distributed to partners in their old profit sharing ratio.
Illustration 2 : Vaishali, Vinod and Anjali are partners sharing profits in the ratio of 4:3:2. From April 1,2011, they decided to share the profits equally. On that date their books showed a credit balance of ‘3,60,000 in the profit and loss account and a balance of ‘ 90,000 in the General reserve. Record the journal entry for distribution of these profits and reserves.
Case (ii) When accumulated profits/losses are not be distributed at the time of change in ratio
Partners may decide that reserves and accumulated profits/losses will not be affected and remains in the books with same figure. In this case, the gaining partner must compensate the sacrificing partner by the share gained by him i.e. Gaining Partner's Capital A/c Dr.
To Sacrificing Partner's Capital A/c.
Illustration 4: Keshav, Meenakshi and Mohit sharing profit and losses in the ratio of 1:2:2,decide to share future profit equally with effect from April 1, 2011. On that date general reserve showed a balance of ` 2,40,000. Partners do not want to distribute the reserves. You are required to give the adjusting entry.
Solution: Keshav : Meenakshi : Mohit
Old ratio 1/5 : 2/5 : 2/5
New ratio 1/3 : 1/3 : 1/3
Sacrifice or Gain:
Keshav = 1/5 – 1/3 = 35/15 = 2/15 (Gain)
Meenakshi = 2/5 – 1/3 = 65/15 = 1/15 (Sacrifice)
Mohit = 2/5 – 1/3 = 65/15 = 1/15 (Sacrifice)
Illustration 5: Neha, Niharika, and Nitin are partners sharing profits and losses in the ratio of 2:3:4. They decided to change their ratio and their new ratio is 4:3:2. They also decided to pass a single journal entry to adjust the following without affecting their book values: ` Profit & Loss account 80,000
General Reserve 40,000
Advertisement Suspense A/c 30,000
You are required to give the single journal entry to adjust the above.
Solution:
Profit & Loss account 80,000
Add: General Reserve 40,000
1,20,000
Less: Advertisement Suspense 30,000
Total amount to be adjusted 90,000
Neha Niharika Nitn
Old ratio 2/9 3/9 4/9
New ration 4/9 3/9 2/9
Sacrifice or Gain :
Neha = 2/94/9=2/9 (Gain)
Niharika = 3/93/9=0 (No change)
Nitin = 4/92/9=2/9 (Sacrifice)
Accounting treatment for Revaluation of Assets and reassessment of Liabilities on change in Profit sharing ratio:
At the time of change in profit sharing ratio of existing partners, Assets and liabilities of a firm must be revalued because actual realizable value of assets and liabilities may be different from their book values. Change in the assets and liabilities belongs to the period prior to change in profit sharing ratio and therefore it must be shared in old profit sharing ratio.
Revaluation of assets and liabilities may be treated in two ways: (i) When revised values are to be shown in the books.
(ii) When revised values are not to be shown in the books
When revised values are to be shown in the books:
In this case revaluation of assets and liabilities is completed with the help of "Revaluation Account”. This account is also known as “Profit and Loss Adjustment Account”. All losses due to revaluation are shown in debit side of this account and all gains due to revaluation are shown in credit side of this account.
Note : (1) Increase in the value of an Asset and decrease in the value of a liability result in profit.
(2) Decrease in the value of any asset and Increase in the value of liability gives loss. Illustration 6:
Piyush, Puja and Praveen are partners sharing profits and losses in the ratio of 3:3:2. There balance sheet as on March 31st 2011 was as follows.
Partners decided that with effect from April 1, 2011, they would share profits and losses in the ratio of 4:3:2. It was agreed that:
(i) Stock be valued at ` 2,20,000.
(ii) Machinery is to be depreciated at 10%.
(iii) A provision for doubtful debts is to be made on debtors at 5%. (iv) Building is to be appreciatd by 20%.
(v) A liability for ` 5,000 included in sundry creditors is not likely to arise.
Partners agreed that the revised value are to be recorded in the books. You are required to prepare journal, revaluation account, partners capital account and revised balance sheet.
Please click the link below to download pdf file for CBSE Class 12 Reconstitution of Partnership.
CBSE Class 12 Accountancy Important Formulas |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set A |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set B |
CBSE Class 12 Accountancy Accounting For Partnership Firms Admission Of A Partner Notes |
CBSE Class 12 Accountancy Accounting For Partnership Firms Fundamentals Notes |
CBSE Class 12 Accountancy Reconstitution Of Partnership Notes |
CBSE Class 12 Accountancy Retirement Or Death Of A Partner Notes |
CBSE Class 12 Accountancy Dissolution Of A Partnership Firm Notes |
CBSE Class 12 Accountancy Accounting For Debentures Notes |
CBSE Class 12 Accountancy Redemption Of Debenture Notes |
CBSE Class 12 Accountancy Financial Statement Of Companies Notes |
CBSE Class 12 Accountancy Analysis Of Financial Statements Notes |
CBSE Class 12 Accountancy Partnership Common Size And Comparative Statements Notes |
CBSE Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner Notes
We hope you liked the above notes for topic Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner which has been designed as per the latest syllabus for Class 12 Accountancy released by CBSE. Students of Class 12 should download and practice the above notes for Class 12 Accountancy regularly. All revision notes have been designed for Accountancy by referring to the most important topics which the students should learn to get better marks in examinations. Our team of expert teachers have referred to the NCERT book for Class 12 Accountancy to design the Accountancy Class 12 notes. After reading the notes which have been developed as per the latest books also refer to the NCERT solutions for Class 12 Accountancy provided by our teachers. We have also provided a lot of MCQ questions for Class 12 Accountancy in the notes so that you can learn the concepts and also solve questions relating to the topics. We have also provided a lot of Worksheets for Class 12 Accountancy which you can use to further make yourself stronger in Accountancy.
You can download notes for Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner for latest academic session from StudiesToday.com
Yes, the notes issued for Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner have been made available here for latest CBSE session
There is no charge for the notes for CBSE Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner, you can download everything free of charge
www.studiestoday.com is the best website from which you can download latest notes for Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner Accountancy Class 12
Come to StudiesToday.com to get best quality topic wise notes for Class 12 Accountancy Part 1 Chapter 3 Reconstitution of a Partnership Firm Admission of a Partner