Admission Of A New Partner Accounts
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Admission Of A New Partner Accounts

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    Admission Of A New Partner Accounts Admission Of A New Partner Accounts Presentation Transcript

    • Admission of a new Partner (Higher Only) Mr Arthur
    • Aims of the Lesson
      • Intro to Admission of a new partner
      • Goodwill
      • Steps in admitting a new partner
    • Admission of new Partner
      • Partnerships may admit a new partner for the following reasons:
        • Raise more capital
        • Death of a partner
        • Increase specialism is partnership
    • Goodwill
      • Goodwill is an intangible asset which may arise from the reputation of the business
        • Value from:
          • Company reputation
          • Customer loyalty
          • Trade marks etc
      • When a new partner joins you may need to calculate the value of goodwill, share it among existing partner’s Capital accounts
      • Goodwill may equal several years average operating profits
    • Steps in Admitting New Partner
      • Revalue Assets and prepare a table showing changes
      • Add profit or loss from revaluation of assets to partners Capital Accounts
      • Calculate existing partner’s share of Goodwill
      • Prepare Capital accounts of all partners
      • Write off Goodwill against all partners
      • Calculate new profit sharing ratio