Query .......

This query is : Resolved

Alpa Doshi (Querist)
Follow

31 January 2008 Dear All,

My query is regarding a partnership firm engaged in MANUFACTURING ACTIVITY having two partners.
The Facts are as under:

Now one of the partner "B" wants to discontinue this partnership. Hence the other partner "A" has agreed to this and wants to continue this business under the same name and wants to admit two new partners and retire partner "B" by paying a lump sum amount for his capital and goodwill.

My query is :

1) From Accounting Point of view:
What shall be the accounting effects of the above? How will the lump sum payment to partner " b" booked in the accounts books and how will the new capital introduced by the new partners shown in the books?

2) From Law point of view:

What happens to the existing :
a) Excise Registration?
b) Vat Registration?
c) Sales Tax Regstration?
d) Pan of the firm?
e) Import Export Licence?

Is new registration required for the above or what have to be done to intimate the respective authorities to intimate the change in constitution of the firm?

Please can anyne help me on above ASAP?

Thanks in advance.....

Alpa Doshi.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
Follow

31 January 2008 when there are two partners and one retires ........it becomes a case of dissolution of firm.....because the firm can not survive with one partner. To save this situation it is better to induct the partneres first and then retire.Then the firm will continue its existence, and the registrations under various acts will continue , because it is only change in constitution of the firm .Howerver, as required under respective laws , intimation for change in constitution will be required.

From accouting point of view ,amount paid to the retiring partner , in excess of his capital contribution is nothing but payemnt agaist goodwill of the firm . Before inducting new partners , GOODWILL a/c can be debited and old partners accoutn credited . The excess paid to the retiring partner is his share of goodwill, on that basis value of total goodwill of the firm can be ascertained and accounted for accordingly.

Alpa Doshi

Alpa Doshi (Querist)
Follow

01 February 2008 Hi,

Thanks for the reply.

Can you please let me know whether we can admit one partner and retire another partner on the same day?

If not, then what is the time frame between admitting the new partner and then retiring the old partner?

Also, can you please let me know where can i find partnership deed format for admitting new partner and retiring old partner.

thanks for the help.....

Regards,

Alpa Doshi

prakesh

prakesh (Expert)
Follow

06 February 2008 Yes you can do it in the same day.but better u do it in different date.

Partnership format will be in the shared files.Just make a search.U can find it

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now