SOLUTION Assets and Liabilities are revalued because the profit or loss due to their revaluation is divided between all partners (including the retiring partner) in their old profit-sharing ratio.
SOLUTION Gaining ratio is required because the continuing partners will pay the amount of goodwill to the retiring partner in their gaining ratio.
SOLUTION All Partner’s Capital A/cs (including retiring) Dr. (in old ratio) To Goodwill A/c
SOLUTION Profit and Loss Suspense A/c Dr. To Deceased Partner's Capital A/c
SOLUTION (i) His share of life policy, (ii) His share of undistributed profits or reserves.
SOLUTION (i) On the basis of time: i.e., On the basis of last year’s profit or average profit of past few years, or (ii) On the basis of Sales.
SOLUTION The following deductions are entered on the debit side of retiring Partner s Capital Account: (i) His share of loss on revaluation of assets and reassessment of liabilities; (ii)…