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CMA Intermediate · Financial Accounting · Admission of Partner

Asha and Bharat share profits 3:2. They admit Chitra for a 1/5 share. Chitra brings Rs 2,00,000 as capital and Rs 60,000 as goodwill premium. Goodwill is not to be retained in the books and the old partners share the premium in their sacrificing ratio, which equals their old ratio here. What amount is credited to Bharat's capital account on account of goodwill?

Bharat is credited with Rs 24,000. The goodwill premium of Rs 60,000 is shared by the old partners in their sacrificing ratio, which is 3:2 here, so Bharat receives two-fifths of the premium, while the remaining Rs 36,000 goes to Asha.

  1. ARs 24,000Correct
  2. BRs 36,000
  3. CRs 12,000
  4. DRs 60,000

Explanation

When the new share is taken proportionately from the old partners, they sacrifice in the old ratio 3:2. Bharat's share of the Rs 60,000 premium is 2/5 x 60,000 = Rs 24,000. Rs 36,000 is Asha's share; using it for Bharat reverses the ratio.

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