Chapter 4 of 10
Concept Maps
Reconstitution of Partnership : Retirement of a Partner — Concept Maps
ICSE · Class 12 · Accountancy
4 concept maps of Reconstitution of Partnership : Retirement of a Partner for ICSE Class 12 Accountancy, each also written out as a text outline.
39 questions40 flashcards7 formulas & key relations5 concepts
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4 Concept Maps
Complete Chapter Overview: Retirement of a Partner
The map in words
- Retirement of Partner
- Meaning and Legal Basis
- Section 32 of Partnership Act 1932
- Consent of all partners
- Express agreement
- Written notice in partnership at will
- Retiring partner called outgoing partner
- Effect
- Old partnership ends
- New partnership begins
- Firm continues
- No liability for acts after retirement
- New Profit Sharing Ratio
- Case 1 Nothing mentioned
- Strike out retiring partner share
- Case 2 Share divided in given ratio
- New Share equals Old Share plus Gained Share
- Case 3 Share gained expressly given
- Add gained share to old share
- Case 1 Nothing mentioned
- Gaining Ratio
- Formula New Ratio minus Old Ratio
- When new ratio not given use old ratio
- Negative result means sacrifice
- Goodwill Treatment
- Retiring partner entitled to share
- No Goodwill Account raised AS 26
- Gaining partners debited in gaining ratio
- Retiring partner capital credited
- If goodwill in books write off first in old ratio
- Hidden Goodwill excess over adjusted capital
- Revaluation of Assets and Liabilities
- Revaluation Account prepared
- ALL partners share including retiring in OLD ratio
- Profit or Loss transferred to Capital Accounts
- Undistributed Profits and Losses
- Method 1 Through journal entries
- Transfer in OLD ratio to all partners
- Method 2 Capital transfer one entry
- Only retiring partner share adjusted
- Gaining partners compensate
- Method 1 Through journal entries
- Payment to Retiring Partner
- Full cash payment
- Part cash plus loan account
- Full transfer to loan account
- Section 37 interest 6 percent or share of profit
- Partners Loan Account
- Transfer capital to loan account
- Add interest on due date
- Pay instalment plus interest
- Repeat till loan closes
- Adjustment of Capitals
- Required Capital equals Total Capital times New Share
- Surplus withdraw cash
- Deficit bring in cash
- Through Current Accounts if specified
- Meaning and Legal Basis
Retirement of a Partner - Complete Chapter Overview
The map in words
- Retirement of Partner
- Meaning and Effects
- Partner leaves firm
- Old partnership ends
- Firm continues
- New partnership formed
- Public notice required
- New Profit Sharing Ratio
- Old Share plus Gained Share
- Nothing mentioned use old ratio
- Specific ratio given calculate gain
- New ratio directly given use it
- Gaining Ratio
- New Ratio minus Old Ratio
- If nothing given use old ratio
- Negative result means sacrifice
- Used for goodwill payment
- Goodwill Treatment
- Retiring partner gets his share
- Gaining partners debit in gaining ratio
- No goodwill account raised AS26
- Hidden Goodwill excess payment
- Existing goodwill written off in old ratio
- Revaluation of Assets
- All partners share in old ratio
- Includes retiring partner
- Profit credit to capitals
- Loss debit to capitals
- Undistributed Profits
- Normal method distribute all
- Capital transfer method keep in books
- Old ratio for distribution
- Payment to Retiring Partner
- Full cash payment
- Part cash part loan
- Full loan account
- Section 37 interest option
- Adjustment of Capitals
- New capitals in new ratio
- Surplus withdraw cash
- Deficit bring in cash
- Through current accounts
- Meaning and Effects
Partner Retirement Process Flow
The map in words
- Partner Retirement Notice
- Step 1: Revalue Assets & Liabilities
- Create Revaluation Account
- Step 2: Calculate New Ratios
- Determine New Profit Sharing Ratio
- Step 3: Account for Goodwill
- Record Retiring Partner's Goodwill
- Step 4: Adjust Capitals
- Distribute Accumulated Profits/Losses
- Adjust for Revaluation Profit/Loss
- Step 5: Settlement
- Immediate Payment?
- Yes: Record Cash Payment
- Close Retiring Partner's Capital A/c
- Prepare New Balance Sheet
- Firm Reconstituted
- Prepare New Balance Sheet
- Close Retiring Partner's Capital A/c
- No: Transfer to Loan Account
- Yes: Record Cash Payment
- Immediate Payment?
- Step 5: Settlement
- Adjust for Revaluation Profit/Loss
- Distribute Accumulated Profits/Losses
- Step 4: Adjust Capitals
- Record Retiring Partner's Goodwill
- Step 3: Account for Goodwill
- Determine Gaining Ratio
- Determine New Profit Sharing Ratio
- Step 2: Calculate New Ratios
- Create Revaluation Account
- Step 1: Revalue Assets & Liabilities
Retirement of a Partner in a Partnership Firm
The map in words
- Retirement of a Partner in a Partnership Firm
- Meaning of retirement
- Legal modes of retirement
- Effect of retirement
- Profit sharing ratios
- Goodwill treatment
- Revaluation of assets and liabilities
- Undistributed profits and losses
- Specific reserves and funds
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Explore DiagramsFrequently Asked Questions
What are the important topics in Reconstitution of Partnership : Retirement of a Partner for ICSE Class 12 Accountancy?
Key topics in Reconstitution of Partnership : Retirement of a Partner include Meaning and Effect of Retirement, Goodwill on Retirement, Revaluation of Assets and Liabilities, Undistributed Profits, Losses, and Reserves. Study these first, then practise questions on each for the ICSE Class 12 board exam.
What do the concept maps for Reconstitution of Partnership : Retirement of a Partner show?
The 4 maps show how the ideas in Reconstitution of Partnership : Retirement of a Partner connect: Complete Chapter Overview: Retirement of a Partner; Retirement of a Partner - Complete Chapter Overview. Each map is also written out as an outline on this page.
How should I revise Reconstitution of Partnership : Retirement of a Partner for the ICSE Class 12 board exam?
Learn the core ideas first, then work through the 39 practice questions on Reconstitution of Partnership : Retirement of a Partner. Revise definitions regularly and use flashcards for quick recall before the exam.
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