Accountancy

Similar to the admission and retirement of a partner, the death of a partner also results in the reconstitution of a partnership.

The premise of Section 37 of the Indian Partnership Act, 1932 section is to ensure that after the retirement or death of a partner, the remaining partners settle their dues as quickly as possible.

Partners’ Capital Account is prepared to ascertain the closing capital balances of the partners of a firm. These capital balances are shown on the Liabilities

The following are the various steps involved in the preparation of the Revaluation Account. First of all, any decrease in the value of assets and increase in the value of liabilities are recorded on the Debit side of the Revaluation Account.

Revaluation of Assets and Reassessment of Liabilities: Sometimes the value of the assets and liabilities of a firm does not appear at its current value in the books of account.

Adjustment of Accumulated Profit and Lose: If there are any accumulated profits or losses appearing in the books of the old firm at the time of admission of a new partner

In the case of Hidden Goodwill, the value of goodwill is not mentioned at the time of admission of a new partner. It can be considered as one of the methods for calculating the value of goodwill of the firm.

There are various cases for treatment of the goodwill in the books of accounts on the eve of admission of a new partner.

Under the Capitalization Method, the goodwill of a firm can be calculated in either of the following two ways. Capitalization of Average Profit and Capitalization of Super Profit

Under Super Profit Method , goodwill is calculated on the basis of excess profit earned by a firm over the normal profit earned by its counterparts in the same industry.