Accountancy -Class XII- Change in Profit Sharing Ratio

Q:1 When Assets and liabilities are revalued at the time of change in profit sharing ratio, a loss of Rs 60,000 was found.

There are two partners a and B sharing profits in the ratio 3:2. Now they are changing the ratio to 2:3.

They want that old values continue to appear in the books.

Give the treatment of Revaluation Loss.

Q:2 Advertisement suspense appearing in the Balance sheet is Rs 30,000.

A& B shared profits in 3:2 which they now changed to 1:1.

Give the accounting treatment when Advt suspense is to shown in new balance sheet at Rs 30,000 only.

Q:3 A & B shared profits in the ratio of 1:1.They change the ratio to 3:2.

Liabilities	Rs	Assets	Rs
Investment Fluctuation Fund	10,000	Investment	1,00,000

Give the accounting treatment when

i)                   No further adjustment.

ii)                 Value of investment has decreased to Rs 96,000

iii)               Value of investment has decreased to Rs 90,000

iv)               Value of investment has decreased to Rs 85,000

v)                 Value of investment has increased to Rs 1,20,000.

Q:4 3 A & B shared profits in the ratio of 1:1.They change the ratio to 3:2.

Liabilities	Rs	Assets	Rs
Workmen Compensation Fund	60,000

Give the accounting treatment when

i)                   No further adjustment.

ii)                 Liability on account of workmen compensation is arrived at  Rs 40,000

iii)               Liability on account of workmen compensation is arrived at  Rs 60,000

iv)               Liability on account of workmen compensation is arrived at  Rs 70,000.

Q: 5 Reserves existed in the books at a value of Rs 30,000.

A & B shared profits in the ratio of 3:2 which they now changed to 2:3.

Reserves are not to be disturbed. Give treatment for reserves due to change in ratio.

What will be done with the remaining amount of reserve which is not adjusted.

Q:6 Why is there a need for Revaluation of assets and reassessment of liabilities?

Q:7 What is the other name for Revaluation Account?

Q:8 X, Y and z are partners in a firm sharing profits in the ratio of 3:3:2. Their Balance sheet as at 31-3-2015was

Liabilities	Rs	Assets	Rs
Creditors	24,000	Cash	27,000
Reserve	36,000	Debtors	50,000
Capitals X            2,00,000		Stock	1,20,000
Y            2,00,000		Machinery	1,59,000
Z            1,00,000	5,00,000	Building	2,00,000
		Advertisement expenditure	4,000
	5,60,000		5,60,000

   The partners decided to change the ratio to 4:3:2. It was agreed that

i)                   Stock is to be valued at Rs 1,10,000.

ii)                 Machinery is to be depreciated by 10%.

iii)               A provision for doubtful debts is to be made on debtors@ 5 %

iv)               Building be appreciated by 20 %

v)                 A liability for Rs 3,000 included in creditors is not likely to arise.

Revised values of assets and liabilities are to be shown in the books. They do not want to distribute the Reserves. Give necessary entries.

Q:9 What is the fundamental applied when there is a change in ratio of existing partners?

Q:10 What is AS- 26?