Read the following facts about admission of a partner.
A. A new partner acquires his share from the old partners that reduces the old partners share in profits.
B. The partner's capital must be adjusted so as to be proportionate to their new profit sharing ratio.
C. Assets and Liabilities may be revalued and reassessed on admission of a partner.
D. Adjustment for Reserves and Accumulated profits/loss is done.
E. Profit sharing ratio of existing partners may change on admission of a new partner.
Choose the correct answer from the options given below:
Read the following facts about admission of a partner.
A. A new partner acquires his share from the old partners that reduces the old partners share in profits.
B. The partner's capital must be adjusted so as to be proportionate to their new profit sharing ratio.
C. Assets and Liabilities may be revalued and reassessed on admission of a partner.
D. Adjustment for Reserves and Accumulated profits/loss is done.
E. Profit sharing ratio of existing partners may change on admission of a new partner.
Choose the correct answer from the options given below:
Solution
On admission, the new partner acquires share from old partners (A), assets and liabilities may be revalued (C), reserves and accumulated profits/losses are adjusted (D), and existing partners' PSR may change (E). Statement B is not always true because adjusting capitals proportionate to new PSR is done only if specifically agreed, not in every admission.
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