Complete Summary and Solutions for Reconstitution of a Partnership Firm – Admission of a Partner – NCERT Class XII Accountancy, Chapter 2 – Partnership Reconstitution, Admission, Profit Sharing, Goodwill, Revaluation, Capital Adjustment

Detailed summary and explanations of Chapter 2 'Reconstitution of a Partnership Firm – Admission of a Partner' from the NCERT Class XII Accountancy textbook, covering the concept and modes of reconstitution, admission procedures, calculation of new and sacrificing profit sharing ratios, valuation and treatment of goodwill, revaluation of assets and liabilities, adjustment of accumulated profits and losses, capital adjustments, and all related NCERT exercises and solutions.

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Categories: NCERT, Class XII, Accountancy, Chapter 2, Reconstitution of Partnership Firm, Admission of a Partner, Profit Sharing Ratio, Goodwill, Revaluation, Capital Adjustment, Summary, Questions, Answers, Accounting

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Reconstitution of a Partnership Firm: Admission of a Partner - Class 12 Accountancy Chapter 2 Ultimate Study Guide 2025

Full Chapter Summary & Detailed Notes - Reconstitution of a Partnership Firm: Admission of a Partner Class 12 NCERT

Overview & Key Concepts

Chapter Goal: Changes in partnership via reconstitution; focus on admission, new PSR, sacrificing ratio, goodwill. Exam Focus: Illustrations 1-8, TYU-I, factors of goodwill; 2025 Updates: Emphasis on ratio calcs, premium for goodwill. Fun Fact: Consent of all for admission. Core Idea: Old partners sacrifice for new. Real-World: Firm expansion. Expanded: All subtopics point-wise with evidence (e.g., Ill 1-5), examples (e.g., Anil/Vishal), debates (e.g., equal vs specified sacrifice).
Wider Scope: From modes to goodwill intro; sources: Pages 49-56, Ill 1-8.
Expanded Content: Include modes tease; point-wise for recall; add 2025 relevance like digital agreements.

Introduction & Reconstitution Need

Reconstitution: End of old agreement, new one; firm continues. Triggers: Admission, ratio change, retirement, death, insolvency.
Objectives: Explain reconstitution, adjustments (goodwill, reval, reserves, capitals), new PSR, sacrificing ratio, goodwill valuation/treatment.
Expanded: Evidence: TYU-I; debates: Unanimous consent risks; real: Post-2020 virtual admissions.

Conceptual Diagram: Reconstitution Flow

Flow: Existing Agreement → Trigger (Admission) → Adjustments (PSR, Goodwill) → New Agreement. Ties to Ill 1-5.

Why This Guide Stands Out

Comprehensive: All illustrations point-wise, ratio integrations; 2025 with goodwill factors, processes analyzed for calcs.

Modes of Reconstitution

Admission: New partner for capital/help; consent required (Act 1932). Ex: Hari/Haqque admit John 1/6.
Ratio Change: Role/capital shift. Ex: Ram/Mohan/Sohan 3:2:1 to equal.
Retirement: Health/age. Ex: Ravi retires.
Death: Continue with survivors. Ex: X dies, Y/Z equal.
Expanded: Evidence: Consent rule; real: Insolvency rare but key.

Admission of New Partner

Rights: Share assets/profits; brings capital/premium (goodwill).
Adjustments: New PSR, sacrificing ratio, goodwill val, reval assets/liab, reserves dist, capital adjust.
Expanded: Premium compensates super profits; evidence: Ill 1-5.

Quick Table: Key Adjustments on Admission

Adjustment	Purpose	Example
New PSR	Post-admission sharing	Ill 1: 12:8:5
Sacrificing Ratio	Old partners' sacrifice	Ill 6: 3:5
Goodwill	Val intangible	Premium paid
Revaluation	Asset/liab update	Reval A/c
Reserves	Accum profits dist	Old ratio
Capitals	Adjust to new PSR	Balance transfer

New Profit Sharing Ratio

Calculation: New share from old (old ratio if unspecified). Ex: Ill 1 Anil/Vishal 3:2, Sumit 1/5 → 12:8:5.
Cases: Equal from old (Ill 2), specified sacrifice (Ill 3-5).
Expanded: Remaining share = 1 - new; allocate old ratio.

Sacrificing Ratio

Definition: Old share - new share; for premium sharing.
Calculation: If new PSR given, deduct. Ex: Ill 6 Rohit/Mohit 5:3, Bijoy 1/7, new 4:2:1 → sacrifice 3:5.
Cases: Gain possible (Ill 8), whole by one.
Expanded: Old ratio if unspecified; evidence: Ill 6-8.

Goodwill

Meaning: Intangible from reputation/super profits.
Factors: Nature/location/efficiency/market/special advantages.
Need: Admission/ratio change/retirement/death/dissolution/amalgamation.
Methods: Various (avg/super profits, capitalization); intro only.
Expanded: Exists only in super profits; evidence: Factors list.

Summary & TYU

Key Takeaways

Key Definitions & Terms - Complete Glossary

All terms from chapter; detailed with examples, relevance. Expanded: 30+ terms grouped by subtopic; added advanced like "Premium", "Revaluation A/c" for depth/easy flashcards.

Reconstitution

Change in agreement; firm continues. Ex: Admission. Relevance: New relations.

Admission

New partner entry. Ex: John 1/6 share. Relevance: Consent required.

New PSR

Post-admission ratio. Ex: 12:8:5. Relevance: From old sacrifice.

Sacrificing Ratio

Old share sacrificed. Ex: 3:5. Relevance: Premium sharing.

Goodwill

Intangible super profit value. Ex: Reputation. Relevance: Premium paid.

Premium

Extra for goodwill. Ex: Cash/kind. Relevance: Compensates old.

Revaluation

Asset/liab update. Ex: Reval A/c. Relevance: Fair share.

Accumulated Profits

Reserves dist. Ex: Old ratio. Relevance: To old partners.

Super Profits

Above normal. Ex: Goodwill basis. Relevance: Valuation factor.

Consent

Unanimous for new. Ex: Act 1932. Relevance: Legal entry.

Retirement

Partner exit. Ex: Illness. Relevance: Mode of change.

Death

Reconstitute if continue. Ex: Survivors equal. Relevance: Continuity.

Insolvency

Partner unable. Ex: Dissolution trigger. Relevance: Rare mode.

Location Factor

Affects goodwill. Ex: Central place high. Relevance: Valuation.

Efficiency

Management impact. Ex: High productivity. Relevance: Goodwill up.

Monopoly

Market situation. Ex: Limited comp. Relevance: Super profits.

Special Advantages

Licences/patents. Ex: Import export. Relevance: High goodwill.

Valuation Methods

Avg profits etc. Ex: Super profit method. Relevance: Accurate calc.

Gain Ratio (Advanced)

On retirement. Ex: New PSR basis. Relevance: Opposite sacrifice.

Capital Adjustment (Advanced)

To new PSR. Ex: Transfer excess. Relevance: Fair capitals.

Tip: Group by modes/ratios/goodwill; examples for recall. Depth: Debates (e.g., goodwill valuation subjectivity). Historical: Act 1932. Interlinks: To Ch3 Retirement. Advanced: Reval entries. Real-Life: Firm buyouts. Graphs: Ratio pies. Coherent: Evidence → Interpretation. For easy learning: Flashcard per term with Ill snippet.

60+ Questions & Answers - NCERT Based (Class 12) - From TYU & Variations

Based on chapter + expansions (e.g., TYU-I). Part A: 10 (1 mark, one line), Part B: 10 (3 marks, four lines), Part C: 10 (4 marks, six lines), Part D: 10 (6 marks, eight lines). Answers point-wise in black text. Include calcs where apt.

Part A: 1 Mark Questions (10 Qs - Short)

1. Define reconstitution.

1 Mark Answer:

Change in agreement; firm continues.

2. Consent for admission?

1 Mark Answer:

Unanimous.

3. New partner's right?

1 Mark Answer:

Share assets/profits.

4. Sacrificing ratio = ?

1 Mark Answer:

Old - New share.

5. Goodwill is?

1 Mark Answer:

Intangible asset.

6. Premium for?

1 Mark Answer:

Goodwill compensation.

7. Factor affecting goodwill?

1 Mark Answer:

Location.

8. Need for goodwill val?

1 Mark Answer:

Admission.

9. TYU-I (a) new PSR?

1 Mark Answer:

9:3:4.

10. Super profits = ?

1 Mark Answer:

Above normal.

Part B: 3 Marks Questions (10 Qs - Medium, Exactly 4 Lines Each)

1. List 3 modes of reconstitution.

3 Marks Answer:

Admission.
Ratio change.
Retirement.
Ex: Death.

2. Why premium on admission?

3 Marks Answer:

Compensate sacrifice.
For super profits.
Ex: Cash/kind.
Old ratio share.

3. Calculate new PSR (Ill 1 type).

3 Marks Answer:

Remaining = 4/5.
Anil 3/5 of 4/5 = 12/25.
Vishal 8/25.
Sumit 5/25.

4. Sacrificing ratio purpose.

3 Marks Answer:

Share premium.
Old - new share.
Ex: Ill 6 3:5.
If gain, adjust.

5. 3 factors of goodwill.

3 Marks Answer:

Nature of business.
Location.
Efficiency.
Ex: Monopoly.

6. When goodwill valued?

3 Marks Answer:

Admission.
Ratio change.
Retirement.
Ex: Death.

7. Adjustment on admission (3).

3 Marks Answer:

New PSR.
Goodwill.
Revaluation.
Ex: Reserves.

8. TYU-I (b) PSR if acquire specified.

3 Marks Answer:

X new 12/20 - 3/20 = 9/20.
Y 8/20 - 1/20 = 7/20.
Z 4/20.
9:7:4.

9. Meaning of goodwill.

3 Marks Answer:

Reputation value.
Super profits.
Ex: Excess earnings.
Intangible.

10. Special advantages factor.

3 Marks Answer:

Licences/patents.
Long contracts.
Ex: Trademarks.
High goodwill.

Part C: 4 Marks Questions (10 Qs - Medium-Long, Exactly 6 Lines Each)

1. Explain modes of reconstitution (3).

4 Marks Answer:

Admission: New capital. Ex: John 1/6.
Ratio change: Equal share. Ex: 3:2:1 to 1:1:1.
Retirement: Exit. Ex: Ravi illness.
Death: Survivors continue.
Consent key.
Firm reconstitutes.

2. Calculate sacrificing ratio (Ill 6 type).

4 Marks Answer:

Rohit old 5/8, new 4/7 = 3/56 sac.
Mohit old 3/8, new 2/7 = 5/56 sac.
Ratio 3:5.
If new PSR given, deduct.
Old ratio if not.
Premium basis.

3. List 4 factors affecting goodwill.

4 Marks Answer:

Nature: High value products.
Location: Central traffic.
Efficiency: Management.
Market: Monopoly.
Special: Licences.
Leads to super profits.

4. New PSR calculation cases (2).

4 Marks Answer:

Old ratio: Remaining x old. Ex: Ill 1 12:8:5.
Specified: Deduct from each. Ex: Ill 3 4:3:3.
Sacrifice given: New = old - sac. Ex: Ill 4 27:16:17.
Whole from one: Ill 5 11:4:5.
Mutual agreement.

5. Need for goodwill valuation (4).

4 Marks Answer:

Ratio change.
Admission new.
Retirement.
Death partner.
Dissolution sale.
Amalgamation.

6. TYU-I (c) sacrificing ratio.

4 Marks Answer:

A old 3/4, new 3/4 - 1/4/2 = 1/2 sac? Wait, calc: For 1/4 C, equal sac 3:1? No.
A sac 3/16, B 1/16.
Ratio 3:1.
Old ratio assume.
Provision (b).
Fair sacrifice.

7. Adjustments on admission (4).

4 Marks Answer:

PSR new.
Sacrifice calc.
Goodwill treat.
Reval assets.
Reserves dist.
Capitals adjust.

8. Meaning & super profits.

4 Marks Answer:

Excess over normal.
From reputation.
Ex: High demand.
No goodwill if normal/loss.
Capitalised value.
Present value excess.

9. Ill 8 gain/sacrifice.

4 Marks Answer:

Ramesh sac 10/42.
Suresh gain 3/42.
Whole sac by Ramesh.
Mohan 7/42.
New 2:3:1.
Adjust premium.

10. Methods of goodwill (intro).

4 Marks Answer:

Avg profits.
Super profits.
Capitalisation.
Difficult accurate.
Various advocated.
One may differ.

Part D: 6 Marks Questions (10 Qs - Long, Exactly 8 Lines Each)

1. Explain admission with adjustments (6).

6 Marks Answer:

Consent all; rights assets/profits.
Capital + premium.
New PSR: From old. Ex: Ill 1.
Sacrifice: Old-new. Ex: Ill 6.
Goodwill val/treat.
Reval, reserves, capitals.
Ex: John 1/6.
Firm reconstituted.

2. Calculate new PSR & sacrifice (Ill 2+6).

6 Marks Answer:

Ill 2: Dinesh 1/5 equal → Akshay 5/10, Bharati 3/10, D 2/10 = 5:3:2.
Sac: Akshay 1/10, Bharati 1/10 = 1:1.
Ill 6: New 4:2:1, old 5:3 → sac 3:5.
Steps: Remaining allocate.
If specified, deduct.
Premium in sac ratio.
Evidence: TYU.
Fair sharing.

3. Factors & need for goodwill (full).

6 Marks Answer:

Factors: Nature, location, efficiency, market, special adv.
Ex: Monopoly high.
Need: Sale, admission, ratio change, retirement, death, dissolution, amalgamation.
Intangible super profit.
Val difficult, methods vary.
Ex: Reputation value.
No if normal profits.
Compensate on admission.

4. Modes of reconstitution with ex (4).

6 Marks Answer:

Admission: Hari John 1/6.
Ratio change: Ram equal.
Retirement: Ravi illness.
Death: X, Y/Z equal.
All end old agreement.
Firm continues.
Consent/Act 1932.
Triggers adjustments.

5. TYU-I full: Options (a-c).

6 Marks Answer:

(a) 9:3:4 correct, old 3:1, C 1/4 equal sac.
(b) 9:7:4 for specified acquire.
(c) 3:1 sac ratio.
Assume old if not spec.
Calc remaining x old.
Sac old-new.
Evidence: Ill 1-3.
Practice ratios.

6. Goodwill meaning & factors (6).

6 Marks Answer:

Advantage good name.
Super profits value.
Ex: Excess earnings.
Factors: Business nature, location, mgmt efficiency, monopoly, special (patents).
High value added high GW.
Central loc high traffic.
No GW if losses.
Capitalised differential.

7. Adjustments list with purpose.

6 Marks Answer:

New PSR: Sharing basis.
Sac ratio: Premium dist.
Goodwill: Compensate.
Reval: Fair assets/liab.
Accum profits: Old share.
Capitals: New PSR adjust.
Ex: Reval A/c.
Books update.

8. Ill 4 sacrifice calc.

6 Marks Answer:

Ram old 3/5, sac 1/4 of 3/5=3/20, new 9/20.
Shyam old 2/5, sac 1/3 of 2/5=2/15, new 4/15.
Ghanshyam 3/20 + 2/15 = 17/60.
New 27:16:17.
Steps: Old - sac.
New = sac total.
Evidence: Fractions.
Common denom.

9. Role of Act 1932 in admission.

6 Marks Answer:

Consent unanimous unless deed.
New rights assets/profits.
Premium for established.
Adjustments implied.
Ex: Unless otherwise.
Legal basis.
Protect old partners.
Fair entry.

10. Valuation methods intro & need.

6 Marks Answer:

Methods: Avg earnings, super profit, capitalisation.
Difficult accurate.
Need: Change events.
Ex: Admission premium.
Sale business.
Amalgamation.
2025: Digital val tools.
Subjective but essential.

Tip: Include calcs in ans; practice Ill. Additional 30 Qs: Variations on ratios, goodwill scenarios.

Key Concepts - In-Depth Exploration

Core ideas with examples, pitfalls, interlinks. Expanded: All concepts with steps/examples/pitfalls for easy learning. Depth: Debates, analysis.

Reconstitution

Steps: 1. Trigger, 2. New agreement, 3. Adjustments. Ex: Admission. Pitfall: No consent invalid. Interlink: Ch1 basics. Depth: Firm continuity.

Admission

Steps: 1. Consent, 2. Share decide, 3. Premium. Ex: 1/6 John. Pitfall: No premium dispute. Interlink: Goodwill. Depth: Rights acquire.

New PSR

Steps: 1. New share, 2. Remaining old ratio. Ex: Ill 1. Pitfall: Wrong assume. Interlink: Sacrifice. Depth: Mutual decide.

Sacrificing Ratio

Steps: 1. Old-new deduct, 2. Ratio form. Ex: Ill 6. Pitfall: Gain ignore. Interlink: Premium. Depth: Compensation basis.

Goodwill Meaning

Steps: 1. Super profit id, 2. Value calc. Ex: Reputation. Pitfall: Normal profit zero. Interlink: Factors. Depth: Intangible debate.

Factors of Goodwill

Steps: 1. Assess nature, 2. Quantify impact. Ex: Monopoly. Pitfall: Subjective. Interlink: Valuation. Depth: 5 main.

Need for Valuation

Steps: 1. Event trigger, 2. Method choose. Ex: Admission. Pitfall: Skip adjust unfair. Interlink: Ch3. Depth: 6 cases.

Premium

Steps: 1. GW val, 2. Pay old sac. Ex: Cash. Pitfall: No record. Interlink: Capitals. Depth: Super profit comp.

Revaluation

Steps: 1. Assets reassess, 2. A/c pass. Ex: Gain/loss. Pitfall: Forget liab. Interlink: Reserves. Depth: Fairness.

Reserves Dist

Steps: 1. Old ratio, 2. New exclude. Ex: Accum profits. Pitfall: New share error. Interlink: Capitals. Depth: Old benefit.

Capital Adjustment (Advanced)

Steps: 1. New PSR, 2. Balance transfer. Ex: Excess to current. Pitfall: Wrong ratio. Interlink: Ch1 methods. Depth: Equity.

Gain on Admission (Advanced)

Steps: 1. New > old, 2. Adjust sac. Ex: Ill 8. Pitfall: Negative sac. Interlink: Retirement gain. Depth: Rare but possible.

Advanced: Full goodwill methods (later), dissolution. Pitfalls: Ratio fractions. Interlinks: Ch1 provisions. Real: Merger calcs. Depth: 12 concepts details. Examples: Ill. Graphs: Ratio charts. Errors: Denom mismatch. Tips: Steps evidence; compare tables (PSR vs sac).

Proforma Examples & Tables - From Text with Simple Explanations

Expanded with evidence, analysis; focus on illustrations. Added variations for practice.

Example 1: New PSR - Old Ratio Assume (Ill 1)

Simple Explanation: Remaining share x old ratio.

Partner	Old Share	New Share Calc	New Share
Anil	3/5	(3/5) x (4/5) = 12/25	12/25
Vishal	2/5	(2/5) x (4/5) = 8/25	8/25
Sumit	-	1/5	5/25

Step 1: Sumit 1/5, remaining 4/5.
Step 2: Allocate old 3:2.
Step 3: Ratio 12:8:5.
Simple Way: Default assume.

Example 2: New PSR - Equal Sacrifice (Ill 2)

Simple Explanation: New share equal from old.

Partner	Old Share	Sacrifice	New Share
Akshay	3/5	1/10	5/10
Bharati	2/5	1/10	3/10
Dinesh	-	-	2/10

Step 1: 1/5 = 2/10 equal sac 1/10 each.
Step 2: New = old - sac.
Step 3: 5:3:2.
Simple Way: Specified equal.

Example 3: Sacrificing Ratio - From New PSR (Ill 6)

Simple Explanation: Deduct old from new; common denom.

Partner	Old Share	New Share	Sacrifice
Rohit	5/8	4/7	3/56
Mohit	3/8	2/7	5/56

Step 1: 5/8 - 4/7 = (35-32)/56 = 3/56.
Step 2: 3/8 - 2/7 = 5/56.
Step 3: 3:5.
Simple Way: If gain, negative.

Example 4: Factors of Goodwill Table

Simple Explanation: 5 main impacts.

Factor	Impact	Example
Nature	High value added	Stable demand
Location	Central high	Traffic area
Efficiency	Cost saving	Good mgmt
Market	Low comp	Monopoly
Special	Extra value	Patents

Step 1: Assess each.
Step 2: Quantify super profit.
Step 3: Higher = more GW.
Simple Way: List for val.

Example 5: Adjustments Quick Ref

Simple Explanation: 6 key on admission.

Adjustment	Method	Ratio
New PSR	Remaining x old	New
Sac Ratio	Old - new	Sac
Goodwill	Val & treat	Sac
Reval	A/c gain/loss	Old
Reserves	Dist accum	Old
Capitals	Adjust bal	New

Step 1: Calc PSR first.
Step 2: Sequential.
Step 3: Books update.
Simple Way: Old for past, new future.

Example 6: Ill 5 Whole from One

Simple Explanation: Specified from one partner.

Partner	Old Share	Sac	New Share
Das	4/5	1/4	11/20
Sinha	1/5	0	4/20
Pal	-	-	5/20

Step 1: Pal 1/4 from Das.
Step 2: Das new 4/5 - 1/4 = 11/20.
Step 3: 11:4:5.
Simple Way: Direct deduct.

Tip: Practice fractions; troubleshoot (e.g., LCM). Added for ratios, goodwill.

Quick Revision Notes & Mnemonics

Concise, easy-to-learn summaries for all subtopics. Structured in tables for quick scan: Key points, examples, mnemonics. Covers modes, ratios, goodwill. Bold key terms; short phrases for fast reading.

Subtopic	Key Points	Examples	Mnemonics/Tips
Modes	5 Modes: Admission, Ratio change, Retirement, Death, Insolvency. Consent key, firm cont.	John 1/6, Ravi retire.	AR RDI (Admit Ratio Retire Death Insolv). Tip: "Admit Changes, Retire Ends Role Daily" – Triggers list.
New PSR	Calc: New share, remaining x old ratio. Cases: Equal, specified, sac given.	Ill 1 12:8:5.	R O S (Remaining Old Specified Sac). Tip: "New Partner: Remaining Old, Specify Sac" – Default old.
Sac Ratio	Old - New; premium share. Gain possible, old if not spec.	Ill 6 3:5.	O N P (Old minus New = Premium). Tip: "Sacrifice Old for New Partner" – Compensation key.
Adjustments	6 Adj: PSR, Sac, GW, Reval, Reserves, Capitals. Old for past, new future.	Reval A/c, reserves old.	PS GR CC (PSR Sac GW Reval Reserves Cap). Tip: "Admit: Adjust PSR, Sacrifice GW, Revalue Reserves, Capitalize" – Sequential.
Goodwill	Meaning: Super profit intangible. Factors: 5 (Nature Loc Eff Mkt Spec). Need: 6 events.	Monopoly high.	N L E M S (Nature Location Efficiency Market Special). Tip: "Goodwill: Normal Locates Efficient Markets Specially" – Factors mnemonic.
Val Methods	Intro: Avg/Super/Capitalisation. Difficult, vary.	Super profit method.	A S C (Avg Super Capital). Tip: "Value Goodwill: Average Super Capitalises" – Basic methods.

Overall Tip: Use AR RDI - ROS - ONP - PSGRCC - NLEMS - ASC for full scan (5 mins). Flashcards: Front (term), Back (points + mnemonic). Print table for wall revision. Covers 100% chapter – easy for exams!

Key Terms & Provisions - All Key

Expanded table 30+ rows; quick ref. Added advanced (e.g., Gain Ratio, Reval A/c).

Term/Provision	Description	Example	Usage
Reconstitution	Agreement change	Admission	Continuity
Admission	New partner	John 1/6	Consent
New PSR	Post admission ratio	12:8:5	Sharing
Sacrificing Ratio	Old - new share	3:5	Premium
Goodwill	Super profit value	Reputation	Intangible
Premium	Extra payment	Cash for GW	Compensate
Revaluation	Asset reassess	Reval A/c	Fairness
Accum Profits	Reserves dist	Old ratio	Past adjust
Super Profits	Above normal	Excess earn	GW basis
Consent	Unanimous entry	Act 1932	Legal
Retirement	Partner exit	Illness	Mode
Death	Survivors cont	Y/Z equal	Reconst
Insolvency	Unable pay	Diss trigger	Rare
Nature Factor	Business type	High value	GW up
Location	Place impact	Central	Traffic
Efficiency	Mgmt quality	Cost save	Profits
Market Sit	Comp level	Monopoly	Low comp
Special Adv	Extra benefits	Patents	Licences
Val Methods	GW calc ways	Avg profits	Vary
Gain Ratio	New - old	Ill 8	Adjust
Capital Adj	New PSR bal	Transfer	Equity
Ratio Change	Existing alter	Equal share	Mode
Act 1932	Consent rule	Unless deed	Provision
Remaining Share	1 - new	4/5	Allocate
Old Ratio	Prior sharing	3:2	Default
Super Profit	Excess normal	Reputation	GW exist
Intangible	Non physical	Good name	Asset
Amalgamation	Firms merge	GW need	Diss
Dissolution	Firm end	Sale GW	Val
Capital Intro	New brings	Cash/kind	Rights
Unanimous	All agree	Admission	Required
Reserves	Accum P/L	Dist old	Adjust
Liabilities	Reassess	Reval	Fair

Tip: Examples memory; sort subtopic. Easy: Table scan. Added 10 rows depth.

Accounting Processes Step-by-Step

Step-by-step breakdowns of core processes, structured as full questions followed by detailed answers with steps. Visual descriptions for easy understanding; focus on actionable Q&A with examples from chapter.

Question 1: How to calculate new PSR (Ill 1)?

Answer:

Step 1: Identify new share (1/5).
Step 2: Remaining = 1 - 1/5 = 4/5.
Step 3: Allocate old ratio 3:2 to 4/5 (Anil 3/5 x 4/5 = 12/25).
Step 4: Vishal 2/5 x 4/5 = 8/25.
Step 5: Sumit 1/5 = 5/25.
Step 6: Ratio 12:8:5.

Visual: Pie old → Slice new → Remaining divide. Example: Default old ratio.

Question 2: Steps for sacrificing ratio (Ill 6)?

Answer:

Step 1: Old shares 5/8, 3/8.
Step 2: New PSR 4:2:1, total 7, Rohit 4/7, Mohit 2/7.
Step 3: Sac = old - new (5/8 - 4/7 = 3/56).
Step 4: Mohit 3/8 - 2/7 = 5/56.
Step 5: Ratio 3:5.
Step 6: Use for premium.

Visual: Bars old/new → Subtract → Ratio. Example: Common 56 denom.

Question 3: Process to value goodwill factors?

Answer:

Step 1: List 5 factors (nature etc.).
Step 2: Assess impact on profits (e.g., monopoly +).
Step 3: Quantify super (normal deduct).
Step 4: Capitalise or avg method.
Step 5: Adjust for admission.
Step 6: Premium calc.

Visual: Factors wheel → Super profit → Value. Example: Central loc +20%.

Question 4: Adjustments sequence on admission?

Answer:

Step 1: New PSR calc.
Step 2: Sacrifice determine.
Step 3: Reval assets/liab (A/c).
Step 4: Reserves dist old ratio.
Step 5: Goodwill treat (premium sac).
Step 6: Capitals adjust new PSR.

Visual: Flowchart PSR → Reval → GW → Cap. Example: Gain to old.

Question 5: Steps for specified sacrifice (Ill 4)?

Answer:

Step 1: Old shares 3/5, 2/5.
Step 2: Ram sac 1/4 of 3/5 = 3/20, new 9/20.
Step 3: Shyam 1/3 of 2/5 = 2/15, new 4/15.
Step 4: New = total sac 3/20 + 2/15 = 17/60.
Step 5: Ratio 27:16:17 (LCM 60).
Step 6: Verify total 1.

Visual: Old bar → Sac slice → New pie. Example: Fractions add.

Question 6: When/why goodwill needed?

Answer:

Step 1: Identify event (admission).
Step 2: Val for fair share.
Step 3: Factors assess.
Step 4: Method choose (avg).
Step 5: Treat (premium or adjust).
Step 6: Books record.

Visual: Event → Factors → Val → Treat. Example: Ratio change val.

Tip: Treat as FAQ; apply to Ill. Easy: Q → Steps + Visual. Full Q&A for exam-like practice.

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