Reconstitution of a Partnership Firm – Admission of a PartnerClass 12 Accountancy Part 1 Assertion & Reason Questions

Assertion (A): Admission of a new partner results in the reconstitution of the partnership firm.

Reason (R): The admission of a new partner leads to a change in the existing partnership agreement, and a new agreement comes into being.

Assertion (A): The premium for goodwill brought in by a new partner is shared by the old partners in their sacrificing ratio.

Reason (R): The premium is a compensation paid to the old partners for the loss of their share in the super profits of the firm which they have surrendered in favour of the new partner.

Assertion (A): Profit or loss on revaluation of assets and reassessment of liabilities is distributed among the old partners in their old profit sharing ratio.

Reason (R): The new partner is not entitled to any share in the profit or loss from revaluation as these changes in value pertain to the period before their admission.