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Sir here the partner's are sharing profit in 5:4:3 & during the accounting year PSR changed to 3:4:4 . Now to write off good will they have used 1st ratio why. Also in profit adjustment , profit is written back in 5:4:3 ratio why?. There is confusion on what ratio to use and where.pls CLR
Answers (6)
here the psr changed from 5:4:3 to 3:4:4 not because of admission or retirement of a partner....due to A's ill health his contribution is less in the business activities....that is why they want to reopen the profit and loss account and want to share in a new ratio.....when it comes to goodwill raise the goodwill in 5:4:3 and writeoff in 3 : 2
jsome jsome
here the psr changed from 5:4:3 to 3:4:4 not because of admission or retirement of a partner....due to A's ill health his contribution is less in the business activities....that is why they want to reopen the profit and loss account and want to share in a new ratio.....when it comes to goodwill raise the goodwill in 5:4:3 and writeoff in 3 : 2
Why 5:4:3 ratio is used to eliminate good will appearing in balance sheet
CA Suraj Lakhotia Admin
There are two aspects. First to eliminate goodwill existing in balance sheet. Basically to bring it down to 0. This will happen in PSR. For fresh goodwill, you can pass it using SR.
Yes sir but in this sum there is revision of PSR on retirement so I asked what PSR to use?
Thread Starter
Sri kanaga VarshiniYes sir but in this sum there is revision of PSR on retirement so I asked what PSR to use?
Any existing balance - use old PSR