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Discuss the accounting issues involved in the admission or withdrawal of a partner from a partnership.

Discuss the accounting issues involved in the admission or withdrawal of a partner from a partnership.

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Answer #1

There are many issues while admission or withdrawal of a partner from a partnership firm. Admission or Withdrawal of Partner is known as Reconstitution of Partnership Firm.

They are as follows :

For Reconstitution as per Accounting view issues faced are :

Agreement of all partners in new profit sharing ratio.

Revaluation of Assets & Liabilities

Calculation of Goodwill

For Withdrawal, Funds to be availed as funds are utilised in some or other Business Activities, it is not an easy task to make it avail.

On general terms issue :

New Agreement to be prepared

Registration of new agreements in various bodies.

This & many more are the issues faced in admission or withdrawal of partner from partnership firm.

For any queries please comment

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