The document discusses the admission of a new partner to an existing business partnership. When a new partner is admitted, the existing partnership agreement ends and a new agreement comes into effect, reconstituting the firm. The new partner receives rights to share future profits of the firm and the assets of the firm. They also become liable for any liabilities or losses of the business. The new partner must bring a share of capital to the partnership as well as pay any premium for goodwill. Several accounting adjustments must be made when a new partner is admitted, including determining new profit sharing ratios, valuing and adjusting goodwill, and reassessing assets, liabilities, reserves, and accumulated profits/losses.

1. ADMISSION OF A PARTNER
Class : XII
Subject : Accountancy
Ms. GEETA HANDA
GEETA HANDA

2. Geeta Handa
PGT Accountancy
• 20 years experience of teaching
accountancy.
• 14 years experience of checking
accountancy papers of CBSE
• Worked as examiner for conducting
practical exam of accountancy.
geet7handa@gmail.com
GEETA HANDA

3. Meaning :-
A person is joining
any existing /continuing business firm
for sharing of profits
GEETA HANDA

4. GEETA HANDA
A person can be admitted as a new partner :-
If it is so agreed in the Partnership Deed.
OR
If all the partners agree for the admission

5. GEETA HANDA
Impact :-
Existing agreement ends
New agreement comes into force
The Firm Reconstituted

6. GEETA HANDA
New Partner gets Two Rights :-
Right to share future profits of firm
and
Right to share in the assets of firm

7. GEETA HANDA
The New Partner becomes Liable for :-
Any Liability of the business
and
Any Loss incurred by the firm

8. GEETA HANDA
The New Partner Brings :-
Share of Capital
And
Premium for Goodwill

9. GEETA HANDA
Effects of Admission of a Partner :-
1. Old Partnership ends and New Partnership
comes but the firm continues.
2. New Partner shares future profit and
combined share of Old Partners reduces.
3. New Partner brings an agreed amount of
Capital in the Firm

10. GEETA HANDA
Adjustments required on Admission :-
1.Determining New Profit Sharing Ratio and Sacrificing
Ratio.
2.Valuation and Adjustment of Goodwill.
3.Revaluation of Assets and Reassessment of Liabilities.
4.Adjustment of Deferred Revenue Expenditure.
5.Adjustment of Reserves, Accumulated Profit/Loss.
6.Adjustment of Capital on the basis of New Ratio.
(if so agreed)

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Geeta Handa