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CPT - Partnership Admission (ICAI Study Material)

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16 November 2008 Amit & Anil are partners of a partnership firm Sharing profits in the ratio 5:3 with capital of Rs. 2,50,000 & Rs. 2,00,000 respectively. Atul was admitted on the following terms: Atul would pay Rs.50,000 as capital and Rs. 16,000 as Goodwill for 1/5th share of profit. Find the balance of Capital accounts after admission of Atul.

a) 2,30,000:1,88,000:50,000
b) 2,20,000:1,82,000:66,000
c) 2,92,500:2,25,500:50,000
d) 2,82,500:2,19,500:66,000

Answer - a) as per ICAI Study Material.

Please explain how the old partners capital can be decreased on admission, if the answer given is correct.
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KAAPIL

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KAAPIL (Expert)
16 January 2009 Both partners are sacrificing their share. i.e. they shared in 60:40. Now they will sacrifice equally. i.e. 20% of new partner will come from 10% each.
Thus they will share 50:30:20.
Hence their capital will decrease proportionatley.
ICAI answer is right.
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