Cheat sheet · Class 12 · CBSE · Commerce Accountancy
Reconstitution of a Partnership Firm – Admission of a Partner cheat sheet
The whole chapter on one page: key formulas, facts and the points to remember, for quick revision before a test.
CBSE Class 12 · Accountancy
Cheat sheet
Chapter 2Admission of a Partner
New ratio, sacrificing ratio, goodwill, revaluation, capital adjustment.
1. Ratios
The new partner's goodwill is shared by old partners in the sacrificing ratio.
2. Goodwill
| Method | Formula |
|---|---|
| Average profit | average profit × number of years' purchase |
| Super profit | (average profit − normal profit) × years' purchase |
| Capitalisation of super profit | super profit × 100 / normal rate |
| Capitalisation of average profit | (average profit × 100 / normal rate) − net assets |
Premium for goodwill (AS 26: no self-generated goodwill is raised): New Partner's Capital/Cash Dr, To old partners in sacrificing ratio.
3. Revaluation Account
- Increase in assets / decrease in liabilities: credit.
- Decrease in assets / increase in liabilities: debit.
- Profit or loss shared by old partners in old ratio.
4. Reserves & Capitals
- Accumulated profits and reserves go to old partners in old ratio.
- Capitals may be adjusted to the new ratio based on the new partner's capital.
5. Key Points
- Existing goodwill is written off in old ratio.
- Hidden goodwill: implied by the new partner's capital.
- Workmen compensation reserve: excess to partners.
- Investment fluctuation reserve: excess over fall.
Remember: Sacrifice | goodwill methods | revaluation | capital adjustment
Reconstitution of a Partnership Firm – Admission of a Partner: questions and notes
More Class 12 · CBSE · Commerce Accountancy cheat sheets
- Accounting for Partnership Firms – Fundamentals
- Reconstitution of a Partnership Firm – Admission of a Partner
- Reconstitution of a Partnership Firm – Retirement/Death of a Partner
- Dissolution of Partnership Firm
- Accounting for Share Capital
- Issue and Redemption of Debentures
- Financial Statements of a Company
- Analysis of Financial Statements
- Accounting Ratios
- Cash Flow Statement
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