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CMA Intermediate · Financial Accounting · Amalgamation of Partnership Firms

Firm X and Firm Y amalgamate. The net assets of Firm X after revaluation are Rs 3,40,000 and those of Firm Y are Rs 2,60,000. Firm X's partners hold net assets valued at Rs 3,40,000 as capital in the new firm. If the new firm's total agreed capital is Rs 6,00,000, what is the combined credit to the partners of Firm Y?

The partners of Firm Y are credited with Rs 2,60,000, which is the revalued net assets contributed by that firm. Because the new firm's total capital of Rs 6,00,000 equals combined net assets, each firm's partners get credit equal to what they brought in.

  1. ARs 2,60,000Correct
  2. BRs 3,00,000
  3. CRs 3,40,000
  4. DRs 6,00,000

Explanation

Total capital Rs 6,00,000 equals combined net assets, 3,40,000 + 2,60,000. Firm Y's partners are therefore credited with their net assets of Rs 2,60,000. Rs 3,00,000 would be an equal split, which ignores the values of the net assets contributed.

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