Retirement or Death of a partner Test

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Retirement or Death of a partner Test - 27

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Weekly Quiz Competition

Question 1
1 / -0

A, B and C are the partners in a business firm sharing their profits in the ratio of 4 : 3 : 2. A new partner D enters the firm. The new profit sharing of A, B, C and D is 5 : 4 : 2: 1. D contributes a goodwill of $$Rs.36,000$$. This goodwill is to be allocated among A, B and C. Which one of the following will be the correct allocation?

A
A - $$Rs.16,000$$, B - $$Rs.12,000$$, C - $$Rs.8,000$$

B
A - $$Rs.12,000$$, B - $$Rs.8,000$$, C - $$Rs.16,000$$

C
A - $$Rs.12,000$$, B - Nil, C - $$Rs.24,000$$

D
A - $$Rs.24,000$$, B - Nil, C - $$Rs.12,000$$

Solution

At the time of admission of a new partner, existing partners suffer a loss in terms of share of profit and due to this reason incoming partner has to bring amount of capital and goodwill to compensate sacrificing partners in their sacrificing ratio.
Calculation of sacrificing ratio of old partners for the given question :
Sacrificing ratio = Old ratio - New ratio
A's sacrifice = (4/9) - (5/12) = 1/36
B's sacrifice = (3/9) - (4/12) = 0
C's sacrifice = (2/9) - (2/12) = 2/36
Allocation of goodwill among sacrificing partner (A and C) will be in ratio of 1:2
A's share of goodwill = Rs. 36000 * (1/3) = Rs. 12000
B's share of goodwill = Rs. 36000 * (2/3) = Rs. 24000
Question 2
1 / -0

A and B share profits in the ratio of 2 : 1. C has been admitted with 1/4 share in profits. The new profit sharing ratio of the partners will be:

A
2 : 1 : 1

B
1 : 2 : 1

C
2 : 1 : 2

D
1 : 1 : 1

Solution
Question 3
1 / -0

If A and B who are sharing profits in the ratio of 3: 1 admit C to one-fourth share in the future profits, the profit sharing ratio shall be

A
A:9/16;B:3/16;C :4/16

B
A: 10/16;B :2/16;C:4/16

C
A : 8/16 B :4/16; C : 4/16

D
A : 7/16 ; B : 5/16; C : 4/16

Solution
Question 4
1 / -0

A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. $$20,000$$ as capital and Rs. $$5,000$$ being half of the premium for goodwill. The value of goodwill of the firm is _____________.

A
$$Rs.10,000$$

B
$$Rs.40,000$$

C
$$Rs.20,000$$

D
None of these

Solution

Calculation of goodwill:
D's contribution of Rs. 5000 consists of only half of 1/4 of goodwill
Therefore, total goodwill of firm should be Rs. 5000 * (4/1) * 2 = Rs.40000
Question 5
1 / -0

Under average profit basis goodwill is calculated using following formula:

A
Average profits * no. of years of purchase.

B
Super profits * years of purchase.

C
Total of the discounted value of expected future profits.

D
Super profit divided with expected rate of return.

Solution

In this method of calculating goodwill, profit of past few years are averaged and adjusted for any expected change in future. For averaging the past profit, either simple average or weighted average may be employed by depending upon the circumstances.
Formula of calculating goodwill under this method is -
Goodwill = Average Profit * No. of years purchase
Question 6
1 / -0

A and B are partners sharing profits and losses in the ratio 5 : 3. They admitted C and agreed to give him 3/10th of the profit. What is the new ratio after C's admission?

A
$$35:42:17$$

B
$$35:21:24$$

C
$$49:22:29$$

D
$$34:20:12$$

Solution

Old ratio (A and B) = 5 : 3
C is admitted for 3/10 share
Let the combined share of profit for all partners after c's admission = 1
Combined share of A and B after C's admission = 1 - C's share
= 1 - (3/10)
= 7/10
New ratio = Old ratio * Combined share of A and B
A's new share = (5/8) * (7/10)
= (7/16)
B's new share = (3/8) * (7/10)
= 21/80
C's share = 3/10
Therefore, new share of A, B and C = (7/16), (21/80) and (3/10)
= (35/80), (21/80) and (24/80)
= 35 : 21 : 24
Question 7
1 / -0

In the case of downward revaluation of an asset which is for the first time revalued, the account to be debited is ________________.

A
fixed Asset

B
revaluation Reserve

C
Profit and Loss account

D
general reserve
Question 8
1 / -0

A and B are partners sharing profits in the ratio $$5:3$$, they admitted C giving him $$3/10^{th}$$ share of profit. If C acquires $$1/5^{th}$$ share from A and $$1/10^{th}$$ from B, new profit sharing ratio will be.

A
$$5:6:3$$

B
$$2:4:6$$

C
$$18:24:38$$

D
$$17:11:12$$

Solution
Question 9
1 / -0

The rate of underwriting commission payable on the issue of shares should not be more than _____.

A
$$2$$%

B
$$3$$%

C
$$4$$%

D
$$5$$%
Question 10
1 / -0

Goodwill is a/an __________.

A
contingent asset

B
tangible asset

C
intangible asset

D
current asset

Solution

Goodwill is an intangible asset that arises when one company purchases another for a premium value. Any excess of the amount of purchase consideration over the value of net assets of the transferor company acquired by the transferee company should be recognised as goodwill in the financial statements of transferee company.
Goodwill is considered as intangible asset because it is not a physical asset like building or equipment.

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Retirement or Death of a partner Test - 27

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Retirement or Death of a partner Test - 27

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SHARING IS CARING

Question 1

A - $$Rs.16,000$$, B - $$Rs.12,000$$, C - $$Rs.8,000$$

A - $$Rs.12,000$$, B - $$Rs.8,000$$, C - $$Rs.16,000$$

A - $$Rs.12,000$$, B - Nil, C - $$Rs.24,000$$

A - $$Rs.24,000$$, B - Nil, C - $$Rs.12,000$$

Solution

Question 2

2 : 1 : 1

1 : 2 : 1

2 : 1 : 2

1 : 1 : 1

Solution

Question 3

A:9/16;B:3/16;C :4/16

A: 10/16;B :2/16;C:4/16

A : 8/16 B :4/16; C : 4/16

A : 7/16 ; B : 5/16; C : 4/16

Solution

Question 4

$$Rs.10,000$$

$$Rs.40,000$$

$$Rs.20,000$$

None of these

Solution

Question 5

Average profits * no. of years of purchase.

Super profits * years of purchase.

Total of the discounted value of expected future profits.

Super profit divided with expected rate of return.

Solution

Question 6

$$35:42:17$$

$$35:21:24$$

$$49:22:29$$

$$34:20:12$$

Solution

Question 7

fixed Asset

revaluation Reserve

Profit and Loss account

general reserve

Question 8

$$5:6:3$$

$$2:4:6$$

$$18:24:38$$

$$17:11:12$$

Solution

Question 9

$$2$$%

$$3$$%

$$4$$%

$$5$$%

Question 10

contingent asset

tangible asset

intangible asset

current asset

Solution

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