Admission Of Partner — Flashcards

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Admission of a partner refers to the process where a new person is inducted into an existing partnership firm. This requires the consent of all existing partners and leads to the reconstitution of the…

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The firm is reconstituted because the admission changes the profit-sharing ratio, rights, and obligations of all partners. A new partnership deed is created, and all financial adjustments like goodwil…

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Sacrificing Ratio is the ratio in which existing partners give up their share of profit in favor of the new partner. It is calculated as: **Sacrificing Ratio = Old Profit Sharing Ratio – New Profit …

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When only the new partner's share is given, it is assumed that the remaining profit is shared by the old partners in their existing ratio. **Steps:** 1. Subtract the new partner's share from 1 to get…

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**Given:** - Old Ratio (A:B) = 3:2 - C's share = 1/5 - Sacrifice by A and B = 1/10 each (since 1/5 ÷ 2) **Calculation:** - A's new share = 3/5 – 1/10 = 6/10 – 1/10 = 5/10 - B's new share = 2/5 – 1/10…

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Goodwill is the intangible value of a firm's reputation that enables it to earn higher profits than normal. It represents the capitalized value of super profits (actual profit minus normal profit). Go…

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1. **Location** – Central or high-footfall locations increase goodwill. 2. **Nature of Business** – Stable or high-value businesses have higher goodwill. 3. **Management Efficiency** – Well-managed fi…

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In the Average Profit Method, goodwill is calculated as: **Goodwill = Average Profit × Number of Years Purchase** Average profit is computed from past years' profits after adjusting for abnormalitie…