CMA Intermediate · Financial Accounting · Amalgamation of Partnership Firms
A and B share profits 2:1, with capitals of ₹2,00,000 and ₹1,50,000. Before amalgamation the building is revalued upward by ₹40,000, machinery is written down by ₹10,000, and an unrecorded outstanding expense of ₹6,000 is recognised. A's capital after crediting the revaluation result, ignoring other items, is:
The net revaluation profit is ₹24,000, being ₹40,000 less ₹10,000 and ₹6,000. A's 2/3 share is ₹16,000, which added to the existing capital of ₹2,00,000 gives ₹2,16,000.
- A₹2,16,000Correct
- B₹2,12,000
- C₹2,24,000
- D₹2,10,000
Explanation
Net revaluation profit = 40,000 - 10,000 - 6,000 = ₹24,000. A gets 2/3 = ₹16,000. A's capital = 2,00,000 + 16,000 = ₹2,16,000. ₹2,24,000 wrongly credits the whole profit to A; ₹2,12,000 uses an equal share of ₹12,000.
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