Retirement-Death of a Partner TS Grewal Solutions: [CBSE] PDF

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BookTS Grewal Accountancy
Class12
Chapter6 – Retirement-Death of a Partner TS Grewal Solutions
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Retirement-Death of a Partner Class 12 TS Grewal Solutions

TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6
TS Grewal Class 12 Solutions Chapter 6

Retirement-Death of Partner Class 12 Solutions

The cessation or exit of a partner, either due to retirement or death, demands significant adjustments to the financial and accounting records of a partnership firm. TS Grewal Class 12 Chapter 6 helps you understand these adjustments meticulously.

Retirement of a Partner

Retirement occurs when a partner ceases to be involved in the regular affairs of the firm but the firm continues its operations without him.

Detailed Breakdown:

  • Revaluation of Assets and Liabilities: This step ensures assets and liabilities reflect their current market values. Any surplus or deficit arising from the revaluation is credited or debited to partners’ capital accounts in their old ratio.
  • Treatment of Goodwill: Goodwill represents the firm’s reputation. On retirement, a partner’s share of goodwill is credited to his account and debited to the remaining partners in the gaining ratio.
  • Disposal of Accumulated Profits and Reserves: Accumulated profits (like general reserve) are distributed among all partners in their old ratio. Similarly, accumulated losses are also adjusted among the partners.
  • Adjustment for Undistributed Profits: Any undistributed profit or loss is adjusted in the old profit-sharing ratio among all partners, including the retiring one.
  • Calculation of Gaining Ratio: This is crucial as it determines how the outgoing partner’s share will be distributed among the remaining partners.
    Formula: Gaining Ratio = New Ratio – Old Ratio.

Death of a Partner

The death of a partner brings an end to his/her association with the firm. Adjustments are made to settle the deceased partner’s capital account.

Detailed Breakdown:

  • Calculation of Deceased Partner’s Capital Account: This account is settled by considering:
    1. Credit balance of the deceased partner’s capital account.
    1. Share of goodwill.
    2. Share in profits or losses up to the date of death.
    3. Interest on capital (if applicable).
  • Treatment of Goodwill: Just like retirement, the deceased partner’s share of goodwill is credited to his/her capital account and debited to the remaining partners in the gaining ratio.
  • Ascertainment of Profit/Loss till Date of Death: Profit or loss from the last balance sheet date to the date of the partner’s death is ascertained. The deceased partner’s share in this profit/loss is calculated using the time ratio and credited/debited to the deceased partner’s capital account.

Important Notes

  • Goodwill: Remember, if the value of goodwill is not provided, it might have to be computed based on either average profits, super profits, or capitalization methods.
  • Undistributed Profits/Losses: These need to be adjusted before any other distribution because they belong to the period when the retiring or deceased partner was active in the firm.
  • Revaluation Account: This account showcases the adjustment values of assets and liabilities. Any surplus or deficit in this account affects all partners, including the retiring or deceased one.

Retirement-Death of a Partner Class 12 TS Grewal Solutions PDF Download

TS Grewal’s Accountancy book is a popular textbook used by students in Class 12th studying Commerce stream. It is known for its clear and concise explanations of accounting principles and practices. As previously mentioned, using TS Grewal Class 12 Solutions can make your studies more effective and productive. In order to make your studies more convenient and productive for you, we have presented you with TS Grewal Solutions Class 12 Chapter 6 PDF for free.

If you want to download the pdf solution, then you can click on the download button given below. The download button will take you to a new page, where you can easily download your TS Grewal Class 12 Solutions for absolutely free of cost.

Conclusion

In conclusion, this was your Retirement-Death of a Partner Class 12 TS Grewal Solutions, Chapter 6. The transition phase during the retirement or death of a partner is a challenging time for a firm, both emotionally and financially. Understanding the intricate accounting adjustments helps ensure smooth financial settlements. As students, mastering these concepts is crucial, not only for scoring well in examinations but also for future professional endeavours in the realm of accountancy. The chapter provides a robust foundation for those aspiring to delve into partnership-based businesses, ensuring they’re equipped to handle changes in the partnership with financial acumen. If you have found our solutions helpful, then make sure share with your friends.

FAQs

What is Gaining Ratio?

It’s the ratio in which the remaining partners acquire the share of the outgoing partner.

Is it compulsory to adjust the value of assets and liabilities at the time of retirement or death of a partner?

It’s generally done to show the true and fair value of assets and liabilities, but it’s based on the agreement between partners.

How is the deceased partner’s share of profit up to the date of death calculated?

It’s usually calculated based on the profit-sharing ratio, taking into account the profits earned from the start of the accounting period until the partner’s death.

Why is goodwill adjusted during retirement or death of a partner?

Since the retiring or deceased partner’s share of profit is being taken over by the remaining partners, they compensate him for his share of goodwill.

If a partner retires, is it necessary for the firm to dissolve?

No, the firm doesn’t necessarily have to dissolve. The remaining partners can continue the business either by forming a new partnership agreement or adjusting the old one.

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