Admission of Partner
When a new partner joins a partnership the old partnership is dissolved and a new partnership is formed. Accounting for admission of new partner depends on the nature of arrangement between the existing partners and the new partner. Such an arrangement can take any of the following forms:
New partner brings additional assets When the new partner brings in new assets, the assets are debited at the value agreed by the partners for the purpose and the partner's capital account is credited for the total value of those assets. |
What adjustments are to be made in the admission of a new partner?
There arises the need for certain adjustments in accounts of a partnership business on admission of a partner- *Adjustment/treatment of goodwill. *Revaluation of assets & liabilities. *Adjustments/distribution of undistributed profit and losses. *Adjustment of capital. *Contribution of purchases of capital How many methods are there. There are three methods in admission of partners. They are- Premium Method:
Revelation Method:
Memorandum Revolution Method:
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