TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Change In Profit – Sharing Ratio Among The Existing Partners 2021-22

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 - Change in Profit - Sharing Ratio among the Existing Partners

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 pdf will be provided in this article. Chapter 4 is all about Goodwill- Nature and Valuation. You can easily download Class 12 TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 pdf by clicking on the link providing below in this article. 

Download TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 PDF  

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4

 


Detailed Topics – TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4   

In this chapter, the students will learn about how the profit-sharing ratio is changed among the existing partners of the firm.  

A firm is reconstituted in the event of:  

  1. Change in the Profit Sharing Ratio among the existing partners 
  2. Admission of a Partner  
  3. Retirement of a Partner  
  4. Death of a Partner  

Adjustments for change in Profit sharing ratio  

  1. Determination of sacrificing and gaining ratio  
  2. Accounting treatment of goodwill  
  3. Accounting treatment of reserves, accumulated Profits, and losses  
  4. Revaluation of assets and re-assessments of liabilities  
  5. Adjustment of capital  

Sacrificing Ratio: It is the ratio by which one or more partner of a firm sacrifices their share of profits in favor of one or more partners of the firm. This ratio is calculated by taking out the difference between the old profit share and the new profit share.

Gaining ratio: It is the ratio by which one or more partners gain a share of profits as a result of sacrificed share in Profits by one or more partners of the firm.  the ratio is calculated by taking out the difference between the new profit share and the old profit share.

Goodwill: Accounting treatment of Goodwill, treatment of existing goodwill, hidden goodwill.

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Sample Questions  

In this section, the students will get TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 Sample Question. These will provide a glimpse of the questions.  

Q1. Why is the revaluation of assets on reconstitution of partners necessary?  

A. At the time of admission of a new partner, it is very important to re-value the assets and liabilities of a partnership firm for ascertaining its fair values. This is done because the value of assets and liabilities may have increased or decreased and consequently their corresponding figures in the old balance sheet may either understand or overstated.

Moreover, it may also be possible that some of the assets and liabilities are left unrecorded. Thus, to record the increase and decrease in the Market Value of the assets and liabilities. A revaluation Account is prepared and any profits or losses associated with this increase or decrease are distributed among the old partners of the firm. 

Q2. X, Y, And Z are sharing Profit and losses in the ratio of 5:3:2. With the effect from 1st April 2018, they decided to share the profits and losses in the Ratio of 5:2:3. Calculate each partner’s gain or sacrifice due to the change in the ratio. 

A. Old Ratio X:Y:Z = 5:3:2  

    New Ratio X:Y:Z = 5:2:3  

    Sacrificing ratio = Old ratio – new ratio  

X’s sacrifice = 5/10 – 5/10 = No gain or sacrifice  

Y’s sacrifice = 3/10 – 2/10 = 1/10 (Sacrifice)  

Z’s sacrifice= 2/10 – 3/10 = 1/10 (Gain)  

Q3. State the ratio in which the partners share accumulated Profits when there is a change in the profit-sharing ratio among existing partners.  

A. Partners share profits or losses on the revaluation of assets and liabilities in their old Profit sharing ratio or existing Profit sharing ratio.  

We have included complete information regarding CBSE TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Change in Profit – Sharing Ratio among the Existing Partners. If you have any questions feel free to ask in the comment section. 

FAQ: TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Change in Profit – Sharing Ratio among the Existing Partners

Can I download a Free PDF for TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Change in Profit – Sharing Ratio among the Existing Partners?

Yes, you can download a free PDF for TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 4 – Change in Profit – Sharing Ratio among the Existing Partners.

What does the change in profit sharing ratio?

A Change in profit sharing ratio means one or more partners acquire interest from another partner or partners. The share of profit of one or more partner (s) increases/decreases the share of one or more partner (s) decreases/increases to the same extent.

What is the result of a change in profit sharing ratio?

Change in profit-sharing ratio of the existing partners results in the reconstitution of the partnership firm.

What is meant by the new profit sharing ratio?

The new profit sharing ratio is the ratio in which all the partners, including new or incoming partners, will share future profits and losses of the firm.

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