Profit Sharing Ratio

Which of the following does not result into reconstitution of a firm?

• Dissolution of partnership firm

• Dissolution of partnership

• Change in profit sharing ratio of existing partners

• Death of partner

Which of the following is/are required at the time of change in profit sharing ratio among partners?

• Accounting treatment of goodwill

• Revaluation of assets and reassessment of liabilities

• Accounting treatment of Accumulated Profit

• All of the above

Arun and Vijay are partners in a firm sharing profits and losses in the ratio of 5 : 1.

Balance Sheet (Extract)

Assets

Machinery 40,000

If value of machinery in the balance sheet is undervalued by 20%, then at what value will machinery be shown in new balance sheet ?

• 44000

• 48000

• 32000

• 50000

How is goodwill treated when there is a change in the profit sharing ratio?

• The gaining partners give the amount of goodwill to the sacrificing partner.

• The gaining partners give the proportionate amount of goodwill to the sacrificing partner.

• The sacrificing partner gives the amount of goodwill to the gaining partner.

• The sacrificing partner give the proportionate amount of goodwill to the gaining partner.

Assertion (A): Restructuring of the firm leads to the change in the profit sharing ratio.

Reason (R): A change in the profit sharing ratio among the existing partners results in a gain of additional share in the future profit for some partners while a loss of a part thereof for other partners.

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Vinayak, Vihaan and Salaj are partners in a firm sharing profits in the ratio of 3:2:1. Mr. Manish joins the firm. Vinayak surrenders 1/4th of his share; Vihaan surrenders 1/3rd of his share and Salaj surrenders 1/5th of his share in favour of Manish. Find the new Profit sharing ratio.

• 135 : 80 : 48 : 97

• 130:70:52:99

• 125:48:32:88

• 140:52:77:92

Answer explanation

Rekha surrenders for Samiksha = 1/4 x 3/6 = 3/24

Sunita surrenders for Samiksha = 1/3 x 2/6 = 2/18

Teena surrenders for Samiksha = 1/5 x 1/6 = 1/30

New share of Rekha = 3/6 – 3/24=9/24

New share of Sunita = 2/6-2/18=4/18

New share of Teena = 1/6-1/30=4/30

Share of Samiksha = 3/24+2/18+1/30=97/360 New Ratio :- 9/24:4/18:4/30:97/360

135 : 80 : 48 : 97