A firm's revaluation account shows a loss of ₹50,000. Their old profit sharing ratio was 5:3:2 and the new…

Question

A firm's revaluation account shows a loss of ₹50,000. Their old profit sharing ratio was 5:3:2 and the new ratio is 2:5:3. Calculate the sacrificing or gaining ratio.

ScanSolve AI Tutor · Accepted Answer

Here's the solution to your accounting problem:

Calculate the Net Effect of Revaluation.
The revaluation involves an increase in the value of Land and a decrease in the value of Stock.
$\text{Gain from Land} = \text{₹}2,50,000$ $\text{Loss from Stock} = \text{₹}3,00,000$ $\text{Net Revaluation Effect} = \text{Gain} - \text{Loss} = \text{₹}2,50,000 - \text{₹}3,00,000 = -\text{₹}50,000$
The net effect is a revaluation loss of ₹50,000.
Determine the Old and New Profit Sharing Ratios.
Old Ratio (Ajeet : Vijeet : Sujeet) = 5:3:2
$\text{Ajeet's Old Share} = \frac{5}{10}$ $\text{Vijeet's Old Share} = \frac{3}{10}$ $\text{Sujeet's Old Share} = \frac{2}{10}$
New Ratio (Ajeet : Vijeet : Sujeet) = 2:5:3
$\text{Ajeet's New Share} = \frac{2}{10}$ $\text{Vijeet's New Share} = \frac{5}{10}$ $\text{Sujeet's New Share} = \frac{3}{10}$
Calculate the Sacrificing or Gaining Share for each Partner.
Sacrificing/Gaining

A firm's revaluation account shows a loss of ₹50,000. Their old profit sharing ratio was 5:3:2 and the new ratio is 2:5:3. Calculate the sacrificing or gaining ratio.

Step-by-step solution

Calculate the Net Effect of Revaluation.

Determine the Old and New Profit Sharing Ratios.

Calculate the Sacrificing or Gaining Share for each Partner.

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