Question

Write the various matters that need adjustments at the time of retirement of partners.

Answer 1

The following are the various matters that need to be adjusted at the time of retirement of partners/partner

(i) Revaluation of assets and liabilities of then new firm.

(ii) Calculation of goodwill of the new firm and its accounting treatment.

(iii) Calculation of new ratio of the remaining partners of the firm.

(iv) Computation of new gaining ratio among rest of the partners.

(v) Distribution of accumulated profits and losses and reserves among all the partners (including the retiring partner).

(vi)Disposal of the amount due to the retiring partner.

(vii) Adjustment of capital accounts of the remaining partners in their new profit sharing ratio.