Some possible Revision Notes for the chapter "Retirement/Death of a Partner" in Class 12 Accountancy are:
1. Retirement/Death of a Partner: It refers to the process of a partner leaving the partnership firm due to retirement or death. This affects the capital base, profit sharing ratio, and distribution of profits of the partnership firm.
2. Calculation of Profit Sharing Ratio: The profit sharing ratio of the existing partners needs to be revised based on the retirement/death of the partner. The new profit sharing ratio is decided by re-allocating the retiring partner's share of profit and loss among the remaining partners. The calculation of the new profit sharing ratio is based on the sacrificing ratio and the gaining ratio.
3. Treatment of the Retiring/Deceased Partner's Capital: The retiring or deceased partner's capital account needs to be settled. The amount to be paid is based on the amount of capital invested by the partner, share of undistributed profits, and share of goodwill (if any).
4. Treatment of Goodwill: Goodwill is the value of the reputation, brand, and customer base of the partnership firm. The value of goodwill needs to be re-evaluated based on the retirement/death of the partner. The value of goodwill is then credited to the Capital Accounts of the remaining partners in their gaining ratio.
5. Adjustment of Reserves and Accumulated Profits: The accumulated profits of the partnership firm need to be adjusted based on the new profit sharing ratio. The adjustment is made by creating a New Profit and Loss Appropriation Account. This account records the adjustment of the reserves and accumulated profits among the remaining partners.
6. Treatment of Insurance Amount: If the partnership firm has taken life insurance for the retiring or deceased partner, the insurance amount is credited to their Capital Account. The amount received is the sum assured under the policy or the surrender value of the policy, whichever is higher.
7. Sharing of Losses: If there are any losses in the partnership firm at the time of retirement/death of the partner, the loss is shared among the remaining partners in the agreed profit sharing ratio.
8. Final Settlement: A final settlement account is prepared to record the settlement of the retiring or deceased partner's capital account, share of undistributed profit (if any), share of goodwill (if any), and insurance amount. After the settlement, the retiring or deceased partner's name is removed from the partnership firm name.
9. Reconstitution of the Partnership Firm: After the retirement/death of the partner, the remaining partners can continue the partnership firm's business as per the new profit sharing ratio. A new deed of partnership is signed to formalize the changes in capital, profit sharing ratio, and other terms and conditions.
More Chapters:-
Revision Notes for Dissolution of Partnership Firm
Revision Notes for Share Capital
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