Download Class 12 commerce accountancy subject all chapters notes by CBSE Toppers Students. and more Study notes Business in PDF only on Docsity! Chapter 4: Reconstitution of a Partnership Firm - Retirement/Death of a Partner Introduction - In this chapter, students will learn about the reconstitution of a partnership firm, specifically in the case of the retirement or death of a partner. Accounting Treatment - Students will learn about the accounting treatment of retirement or death of a partner, including the need to prepare a new partnership deed, valuation of goodwill, and settlement of the partner's capital account. Calculation of New Profit Sharing Ratio - With the retirement or death of a partner, the profit sharing ratio among the remaining partners may change. Students will learn how to calculate the new profit sharing ratio and prepare the necessary accounts. Treatment of Goodwill - The retirement or death of a partner may result in the creation or revaluation of goodwill. Students will learn about the accounting treatment of goodwill, including how to calculate and record it in the partnership accounts. Settlement of Partner's Capital Account - Students will learn about the process of settling the capital account of a retiring or deceased partner, including the distribution of the partner's share of profits and losses, the payment of the partner's share of capital, and the recording of the necessary journal entries. Treatment of Reserves and Accumulated Profits - Students will learn about the treatment of reserves and accumulated profits in the retirement or death of a partner, including the allocation of profits and losses to the partners' capital accounts. Treatment of Life Insurance Policy - If the partnership has a life insurance policy on the life of a partner, students will learn about the accounting treatment of the policy in the event of the partner's death. Continuation of the Business - In some cases, the remaining partners may choose to continue the business after the retirement or death of a partner. Students will learn about the accounting treatment of such continuation, including the recording of the necessary journal entries. Overall, Chapter 4 of an introductory accountancy course focuses on the reconstitution of a partnership firm through the retirement or death of a partner. Students will learn about the accounting treatment of retirement or death, including the valuation of goodwill, settlement of the partner's capital account, and treatment of reserves and accumulated profits.
