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Admission of a partner is one of the modes of reconstitution of a partnership firm. A new partner is admitted either for increasing the partnership capital or for strengthening the management of the firm. A person may be admitted as a new partner with the consent of all the existing partners or in accordance with the agreement. Whenever a partner is admitted into the partnership firm, he acquires two rights i.e


(i) the right to share in the assets of the partnership and


(ii) the right to share in the profits of the business.


Following are the most important accounting aspects to be considered at the time of admission of a new partner:

  • Computation of new profit sharing ratio and sacrifice ratio
  • Accounting treatment of goodwill
  • Revaluation of assets and liabilities
  • Treatment of undistributed profits and accumulated losses
  • Adjustment of capital accounts

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