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Treatment of goodwill in partnership accounts

This is illustration 11 sir. Can u explain (a) adjustment point

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siva chaitanya

siva chaitanya

CA Foundation

1K+

12-Mar-21 13:30

12

Answers (12)

As we know machine is our assets and it increases our normal value of business and we have just added it as revenue, it means our normal value of business is less then we need to add this to have exact normal value of business


Shubham Verma

Shubham Verma

CA Foundation

5

12-Mar-21 15:35

but purchase of machine is added as revenue it increases profit but purchase of machine is capital expenditure so for rectifying it we should decrease profit know?


siva chaitanya

siva chaitanya

CA Foundation

1K+

12-Mar-21 16:05

Adjust the profits of 2018-19 by adding back the cost of machinery and reducing the depreciation on such machinery. By charging it as revenue, our profit was understated. By adding back we can arrive at the correct profit.


ruchi lahoti

ruchi lahoti

Moderator

12-Mar-21 18:39

Adjust the profits of 2018-19 by adding back the cost of machinery and reducing the depreciation on such machinery. By charging it as revenue, our profit was understated. By adding back we can arrive at the correct profit.

Mam, in adjustment they have already given that machine was depreciated. Then y we need to again reduce the profit ?


Meda Jeevansai

Meda Jeevansai

CA Foundation

11K+

12-Mar-21 19:12

but purchase of machine is added as revenue it increases profit but purchase of machine is capital expenditure so for rectifying it we should decrease profit know?

Nhi bro dekho hmne isey revenue expenditure mana h yani p&l reduce hua h na to profit yani kam h so we will add this to ascertain the correct profit


Shubham Verma

Shubham Verma

CA Foundation

5

12-Mar-21 19:59

Bro can you tell the page number of that illustration?

8.49


Shubham Verma

Shubham Verma

CA Foundation

5

12-Mar-21 19:59

Nhi bro dekho hmne isey revenue expenditure mana h yani p&l reduce hua h na to profit yani kam h so we will add this to ascertain the correct profit

Ok we treated as revenue expenditure ok thanks ð???


siva chaitanya

siva chaitanya

CA Foundation

1K+

12-Mar-21 20:57

Plz reply sir/mam

This depreciation is for the machine we had charged as revenue instead of capital expenditure


ruchi lahoti

ruchi lahoti

Moderator

13-Mar-21 16:26

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