59 :- The partnership deed of Aman, Bharat and Chetan has a clause that any partner may retire from the firm on the following terms by giving six months notice in writing. The retiring partner shall be paid :
(a) The amount standing to the credit of his Capital account and Current account.
(b) His share of profit to the date of retirement, calculated on the basis of the average profit of the three preceding completed years, if he retires in between the year.
(c) His share of goodwill of the firm calculated on the basis of 1.5 times the average profit of the three preceding completed years.
(d) Assets shall be revalued and liabilities re-assessed. Retiring partner will get his share in the gain (pr8ofit) and will bear loss, if any.
Chetan gave notice on 31st March, 2024, to retire with effect from 30th september, 2024. On that date, the balance of his capital was Rs 1,60,000 and his current account (in debit) Rs 5,000. The profits for the three preceeding completed years were : I – Rs 45,000; II – Rs 30,000 and III – Rs 24,000.
Revaluation of Assets and reassessment of liabilties resulted in neither gain (profit) nor loss.
What amount is due to Chetan in accordance with the partnership agreement ?
Solution :-
(a)Calculation of Chetan’s profit in profit of the firm
Average profit of last 3 years = 45,000 + 30,000 + 24,000/3
= 99,000/3
= Rs 33,000
Chetan’s share of profit (6 months) = 33,000 x 6/12 x 1/3
= Rs 5,500
(b)Calculation of Chetan’s share of goodwill
Goodwill of the firm = Average profit of last 3 years x 3/2
= 33,000 x 3/2
= Rs 49,500
Chetan’s share in goodwill = 49,500 x 1/3
= Rs 16,500
It is contributed by Aman and Bharat in their gaining ratio I.e, 1:1
Aman contributed = 16,500 x 1/2 = Rs 8,250
Bharat contributed = 16,500 x 1/2 = Rs 8,250