Partnership

Admission

Easy

common

On the admission of a new partner, an increase in the value of assets is debited to:

Profit and Loss Adjustment account

Assets account

Old partner's capital account

New Partner Capital Account

✅ Correct Option: 2

When a new partner is admitted, the firm's assets and liabilities are revalued to reflect their true market value. This ensures that old partners get credit for any appreciation that occurred during their tenure.

When an asset increases in value, the asset account must reflect this higher value.

Journal Entry for increase in value of asset:

Assets Account Dr.

To Revaluation Account (Profit and Loss Adjustment Account)

The increase is debited to the Assets Account to show the enhanced value of the asset in the books.

The corresponding credit goes to Revaluation Account (also called Profit and Loss Adjustment Account), which accumulates all gains and losses from revaluation. The profit from this account is then distributed to old partners in their old profit-sharing ratio.

Note: Option 1 (Profit and Loss Adjustment Account) receives the credit entry, not the debit. The question specifically asks what is debited, which is the Assets Account.

Correct Option: 2 (Assets Account)

2022: 23 Aug Shift 2

From the above calculate amount of Goodwill :

2025: 4 June Shift 2

Which of the following factors affects the value of goodwill?

(A). Location of Business

(B). Partner's Performance

(C). Nature of Business

(D). Market Situation

Choose the correct answer from the options given below:

2026: 13 May Shift 1

When a new partner is entered into firm, goodwill already appeared in books of accounts of firm, should be written off in which of the following.

2025: 15 May Shift 1

A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in a similar business is 25%. Ascertain the value of goodwill by capitalisation of average profits method, given that the value of net assets of the business is Rs. 3,20,000.

2026: 21 May Shift 2

Sometimes, at the time of admission, the old partners agree that their capital should also be adjusted to be proportionate to their profit sharing ratio on the basis of the new partner's capital. Identify the correct sequence to be followed:

A. Ascertain the total capital of the firm on the basis of the new partner's capital.

B. Compare old partners' capital with adjusted capital of old partners.

C. Ascertain capital of old partners after all adjustments like interest on capital, salary, etc.

D. Ascertain deficiency or surplus capital of partners.

Choose the correct answer from the options given below:

2025: 13 May Shift 1

On the admission of a new partner, an increase in the value of assets is debited to:

On the admission of a new partner, an increase in the value of assets is debited to:

Solution

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