What is Ascertaining the Amount Due to Retiring/Deceased Partner?

Ascertaining the retiring/deceased partner is the claim against the enterprise and explain the system of its settlement; outline the retiring partner’s loan a/c, if needed; Outline the dead partner’s enforcer’s a/c in the case of death of a partner and the balance sheet of a reconstituted enterprise.

The total sum due to the retiring partner (in case of retirement) and to the legal officials/executors (in case of death) incorporates :

  • The credit balance of his capital a/c
  • The credit balance of his current a/c (if any)
  • Partner’s share of goodwill
  • His share of accrued profits or reserves
  • His share in the profit of revaluation of assets and liabilities
  • His share of gains up to the date of retirement/death
  • Interest on his capital, (only) if involved, up to the date of retirement/death
  • Commission/salary, if any, due to him until the date of retirement/death

The below mentioned following deductions, if any, have to be made from that particular partner’s share :

  • Debit balance of his current a/c (if any)
  • His share of goodwill to be written off, if required
  • His share of accrued losses
  • Partner’s share of loss on revaluation of assets and liabilities
  • His portion of loss up to the date of retirement/death
  • His drawings until the retirement/death
  • Interest on drawings, (only) if involved, up to the date of retirement/death

Hence, in the case of admission, the diverse accounting factors incorporated on the death or retirement of a partner are as given below :

  • Determination of new profit sharing ratio (NPSR) and gaining ratio
  • Treatment of goodwill
  • Revaluation of assets and liabilities
  • Adjustment in respect of unrecorded assets and liabilities
  • Allocation of accrued gains and losses
  • Determination of share of profit or loss up to the date of death/retirement
  • Adjustment of capital, if needed
  • Settlement of the amounts due to the deceased/retired partner

The above mentioned is the concept that is explained in detail about Ascertaining the Amount Due to Retiring/Deceased Partner for the class 12 Commerce students. To know more, stay tuned to BYJU’S.

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