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Retirement or Death of a partner Test - 41

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Retirement or Death of a partner Test - 41
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  • Question 1
    1 / -0
    A, B, C are partners sharing profits and losses in the ratio of $$4/9:1/3:2/9$$. B retires and surrenders $$1/9$$th of his share in favour of A and remaining in support of C. The new profit sharing ratio will be ______. 
    Solution
    Old share (A, B and C) = 4/9 : 1/3 : 2/9 or 4 : 3 : 2
    Share of B = 3/9 
    Share of B taken by A = (3/9) * (1/9) = 3/81 
    Share of B taken by C = (3/9) * (8/9) = 24/81
    New profit sharing ratio = Old ratio + Share taken from B
    A's new share = (4/9) + (3/81) = 39/81
    C's new share = (2/9) + (24/81) = 42/81
    Therefore, new share of A and C = 39 : 42 or 13 : 14
  • Question 2
    1 / -0
    A, B, C are partners sharing profits and losses in the ratio of 4/9: 1/3: 2/9. B retires and surrenders 1/9th from his share in favour of A and remaining in support of C. The new profit sharing ratio will be ______. 
    Solution
    Old ratio (A, B and C) = 4/9 : 1/3 : 2/9 
    B's share = 1/3
    Share of B taken by A = (1/3) * (1/9) = 1/27
    Share of B taken by C = (1/3) * (2/9) = 2/27
    New ratio = Old profit share + share taken from B
    A = (4/9) + (1/27) = 13/27
    C =  (2/9) + (2/27) = 8/27
    Therefore, new ratio of A : C = 13 : 8
  • Question 3
    1 / -0
    The following particulars are available in respect of the business carried on by a partnership firm:
    Trading Results:
    Year I             Loss         Rs. 10,000
    Year Il            Loss         Rs. 12,000
    Year Ill           Profit        Rs. 1,50,000
    Year IV          Profit        Rs. 1,20,000
    The value of goodwill on the basis of 5 years purchase of the average profit of the business is _________. 
    Solution

  • Question 4
    1 / -0
    X, Y, Z are partners sharing profits and losses in the ratio of $$1/2:1/8: 3/8$$. Z retires and surrenders $$4/9$$th of his share in favour of X and remaining in support of Y. The new profit sharing ratio will be ______. 
    Solution
    Old ratio (X, Y and Z) = 1/2 : 1/8 : 3/8 or 4 : 1 ; 3
    Z's share = 3/8
    Share of Z taken by X = (3/8) * (4/9) = 12/72
    Share of z taken by Y = (3/8) * (5/9) = 15/72
    New share = old share + Share taken from Z
    X's new share = (4/8) + (12/72) =48/72
    Y's new share = (1/8) + (15/72) = 24/72 
    Therefore, new share of X and Y = 48 : 24 or 2 : 1
  • Question 5
    1 / -0
    A and B are partners, sharing profits in the ratio of 5:3 ,they admitted C , who acquires 1/10th equally from the both. What will be the new profit sharing ratio?
    Solution
    C is acquiring 1/10th equally from both A and B,
    A's new share= 5/8 - 1/10= 21/40
    B's new share= 3/8 - 1/10= 11/40
    C's share= 8/40
    New profit-sharing ratio= 21:11:8
    Therefore, A is the correct answer.
  • Question 6
    1 / -0
    A, B, and C share profit and losses in the ratio of 3: 2: 1. D is admitted with 1/6 share which he gets entirely from A. New ratio will be ___________.
    Solution
    D is acquiring 1/6th share entirely from A,
    A's new share= 3/6 - 1/6= 1/3
    Hence new ratio= 1/3:1/3:1/6:1/6
    Therefore, A is the correct answer.
  • Question 7
    1 / -0
    Total Capital Employed in the firm Rs. 16,00,000.
    Reasonable Rate of Return 15%.
    Profits for the year Rs. 24,00,000.
    The value of goodwill using capitalization method is _________. 
    Solution

  • Question 8
    1 / -0
    A firm has an average profit of Rs 60,000. Rate of return on capital employed is 12.5% p.a. Total capital employed is Rs 4,00,000. Goodwill is to be calculated on the basis of two years purchase of super profit. Find the amount of goodwill?
    Solution
    Calculation of Goodwill by Super profit method 
    Goodwill = Super profit * No. purchase years
                    = 10000 * 2
                    = 20000
    Super profit = Average profit - Normal Profit
                         = 60000 - 50000
                         = 10000
    Normal Profit = Capital employed * Rate / 100
                            = 400000 * 12.5 / 100
                            = 50000
  • Question 9
    1 / -0
    The profits for Year I are Rs 4,000; for Year ll is Rs.52,200, and for Year lll is Rs. 62,400. Closing stock for Year ll and Year lll includes the defective items of Rs. 4,400 and Rs. 12,400 respectively which were considered as having market value NIL. The value of goodwill on average profit method is ________. 
    Solution

  • Question 10
    1 / -0
    What do you mean by purchasing years?
    Solution
    When we purchase a business we will have to pay for the goodwill along with the value of the net assets. Goodwill comes in existence after years of profitability. That is subjected to agreement between the buyer and the seller. This agreed number of years is the 'number of years purchase' which is used for valuation of goodwill.
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