— Kishore V, SME and ACW at Edumarz
The following are the many elements that must be updated when a new partner is admitted.
1. Profit Sharing Ratio:
- A new profit sharing ratio is calculated.
2. Goodwill:
- The valuation and adjustment of goodwill among the old partners who are sacrificing.
3. Assets and Liabilities Revaluation:
- Assets and liabilities are revalued to determine the current worth of the partnership firm’s assets and liabilities.
- Furthermore, the revaluation profit or loss must be split among the former partners.
4. Accumulated Profits, losses, and reserves:
- They are dispersed among the former partners in the same proportion as before.
5.Adjustment of the partners’ capital.