Question

Based on the above, answer the question. Amrita and Kalyani are partners sharing profits in the ratio of 3 : 2. They decided to expand the business by admitting Suraj as a new partner for 1/4th share. Suraj’s share of goodwill is valued at Rs 90,000 for which he compensated Amrita and Kalyani in the ratio 1 : 4. Following information is also provided:

• Machinery : Rs 25,00,000
• Land : Rs 10,00,000
• Computer : Rs 2,50,000
• Workmen compensation fund : Rs 5,30,000

Claim against workmen compensation is Rs 2,00,000 and goodwill appeared in the books at Rs 60,000.
Share of revaluation profit of Amrita and Kalyani is:

• A. Rs 24,00,000 and Rs 16,00,000
• B. Rs 16,00,000 and Rs 24,00,000
• C. Rs 8,00,000 and Rs 32,00,000
• D. Rs 20,00,000 and Rs 20,00,000

Hint:

Make sure you account for all assets, liabilities, and worker adjustments.

Answer 1

The Correct Option is A

Calculate the value of profit for Amrita and Kalyani Understanding the Revaluation of Assets: Here, assets have been revalued upwards, affecting the capital account.
Step 1: Calculate the increase in each asset
Land: Increase of Rs 40,00,000 (50,00,000 - 10,00,000)
Machinery: Increase of Rs 2,00,000 (27,00,000 - 25,00,000)
Decrease in Computer: Rs 2,00,000 (Rs 2,50,000 - Rs 50,000)
Workmen compensation: There is also the workmen compensation involved Rs 2,00,000 (claim). New profit = Rs 40,00,000 + Rs 2,00,000 - Rs 2,00,000 = Rs 40,00,000 Amrita’s share of profit = 3/5 * Rs 40,00,000 = Rs 24,00,000
Kalyani’s share of profit = 2/5 * Rs 40,00,000 = Rs 16,00,000