Class 12 Accountancy - RAJASTHAN
Reconstitution of a Partnership Firm: Admission of a Partner
The chapter 'Reconstitution of a Partnership Firm: Admission of a Partner' in Class 12 Accountancy under the Rajasthan Board (RBSE) deals with the accounting treatment when a new partner enters an existing business. Students learn how to calculate new profit-sharing ratios and sacrificing ratios, account for goodwill as per AS-26, revalue assets and liabilities, and distribute accumulated profits and reserves. This chapter is a fundamental stepping stone for partnership accounts and carries high weightage in the RBSE board exams, often appearing as comprehensive 6-mark practical problems.
Start Learning FreeKey Concepts
Sacrificing Ratio
The proportion in which old partners surrender their share of profit in favor of the incoming partner, calculated as Old Ratio minus New Ratio.
Treatment of Goodwill
Accounting adjustments required when a new partner brings premium for goodwill, which is then distributed among sacrificing partners in their sacrificing ratio.
Revaluation of Assets and Liabilities
The process of reassessing the true value of assets and liabilities at the time of admission, with the net gain or loss transferred to old partners' capital accounts.
Distribution of Reserves and Accumulated Profits
Undistributed profits, general reserves, and accumulated losses appearing in the old balance sheet are transferred to the old partners' capital accounts in their old profit-sharing ratio.
Adjustment of Capitals
Sometimes partners decide to adjust their capital accounts in the new profit-sharing ratio based on the new partner's capital or total capital of the firm.
Important Formulas
Board Exam Info
In the Rajasthan Board (RBSE) Class 12 Accountancy paper, this chapter typically carries around 6 to 8 marks. Questions usually include a comprehensive 6-mark or 8-mark numerical problem involving Revaluation Account, Partners' Capital Accounts, and the Balance Sheet of the reconstituted firm, alongside 1-mark objective questions.
Frequently Asked Questions
What is the difference between sacrificing ratio and gaining ratio?
Sacrificing ratio is calculated at the time of admission of a partner when old partners give up a share of their profit. Gaining ratio is calculated at the time of retirement or death of a partner when remaining partners acquire an extra share.
How is goodwill treated if the new partner cannot bring cash for premium?
If the new partner fails to bring cash for goodwill, their current account is debited, and the sacrificing partners' capital accounts are credited with their respective shares of goodwill.
Why is a Revaluation Account prepared during admission?
It is prepared to record the increase or decrease in the value of assets and liabilities so that the profit or loss up to the date of admission belongs solely to the old partners in their old ratio.
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