TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6 – Retirement / Death of a Partner 2021-22

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6: These solutions are created by the experts of KopyKitab. It which will be very useful for the students in the preparation of their board exams with these TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6. In this article we will provide all the important topics in detail which are covered in the chapter along with TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6.

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TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6

Detailed Topics – TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6

In this section, the students will get TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6 detailed topics. Retirement of a Partner means ceasing to be a partner of the firm.

A partner may retire:-

1. If there is an agreement of this effect  
2. All partners give consent  
3. At will be giving written notice.  

Amount due to retiring/deceased Partner  

1. The credit balance of his capital  
2. The credit balance of his current account  
3. Share of Goodwill  
4. Share of Reserve of Undistributed Profits 
5. Interest on Capital if involved  
6. Salary  
7. His share in the profit on revaluation of assets and liabilities.  
8. Share in Profits up to date of Retirement/Death  

Liability of a Partner:- Liability of the Firm for the Acts before Retirement. A retiring partner remains liable for all the acts of the firm up to the date of his retirement.  

Matters that need accounting adjustment at the time of retirement:-  

1. Determination of new Profit sharing ratio  
2. Determination of gaining ratio  
3. Treatment of goodwill  
4. Revaluation of assets and liabilities  
5. Adjustment of accumulated profits and losses  
6. Adjustment of capital  
7. Determination of the amount payable to the retiring Partner  

New Profit sharing ratio:- the ratio in which the continuing partners will share profits and losses is called the new Profit ratio 

Gaining ratio:- the ratio in which the remaining partners have acquired the share from the retiring Partner is called the gaining ratio.  

Treatment of Goodwill:- Goodwill is compensation paid to an outgoing partner payable by remaining partners in their gaining ratio.  

Revaluation of Assets and Re-assessments of Liabilities:- Revaluation of assets and re-assessment of liabilities are to be done in the same way as in the case of admission of a new partner.  

TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6 Sample Questions

In this section, the students will get TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6 Sample Question. These will provide a glimpse of the questions. 

Q1. Explain the Procedure of determining the amount payable to a retiring Partner when he leaves the firm.  

A. Amount payable to a retiring Partner when he leaves the firm:-  

1. Change in the profit-sharing ratio i.e. determining New Profit sharing Ratio and Gaining Ratio 
2. Valuation and Adjustment of Goodwill  
3. Revaluation of assets and Re-assessment of Liabilities  
4. Reserves and Undisturbed Profit (Accumulated Profit/Losses)  
5. Computation of retiring Partner’s Internet and Payments to the Retiring Partner.  
6. Adjustment of Capital.  

Q2. Why are Assets and Liabilities revalued on the retirement or death of a Partner?  

A. At the time of retirement or death of a Partner, assets of the firm are revalued and liabilities are reassessed with a purpose that the retiring Partner is not at an advantage or disadvantage because of the change in the values.

To give effect to the change in value, a profit and loss adjustment account and Revaluation Account are prepared in the same manner is prepared at the time of admission of a Partner. In recapitulation:-  

1. An increase in the value of assets, unrecorded assets, decrease in the number of Liabilities and excess provision written back are credited to Revaluation Account.  
2. Decrease in value of assets, increase in the number of Liabilities, Liabilities provided and unrecorded Liabilities are debited to it.  
3. Gain or loss from the revaluation is distributed among the partners in their old Profit-sharing ratio. Gain on revaluation is credited to the Partners’ Capital Account or Partner’s Current Account.  
4. After revaluation, assets and liabilities are shown at their revised value in the new balance sheet of the firm.  

Q3. What is meant by the retirement of a Partner? How can a Partner retire from the firm?  

A. Retirement of a Partner means that the partner ceases to be a partner of the firm. It results in the reconstitution of the firm by which old partnership comes to an end a new partnership among the continuing partners comes into existence. A partner can retire from the firm:-  

1. There is an agreement to that effect.  
2. If all the partners agree to his retirement. 
3. If the partnership is at will, by giving a written to the remaining partners of his decision to retire.  

We have included complete information regarding CBSE TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 6 – Retirement / Death of a Partner. If you have any questions feel free to ask in the comment section. 

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