Admission of a Partner

CBSE Class 12 Accountancy | 2026–27

What Changes When a Partner Enters?

An incoming partner obtains a share of future profits. Existing partners usually sacrifice part of their shares. Before recording the new arrangement, calculate the new ratio and sacrificing ratio.

1. New Ratio – Worked Example

A and B share 3:2. C is admitted for 1/5, taken equally from A and B. A sacrifices 1/10 and B sacrifices 1/10. A’s new share = 3/5 − 1/10 = 1/2. B’s new share = 2/5 − 1/10 = 3/10. C = 1/5. New ratio = 5:3:2.

2. Goodwill

If C brings ₹40,000 as goodwill for a 1/5 share, implied goodwill = ₹40,000 ÷ 1/5 = ₹2,00,000. The amount is credited to the sacrificing partners according to their sacrifice, subject to the question’s method.

3. Revaluation

Revalue assets and liabilities before admission so that the incoming partner does not receive a share of gains or losses that arose before entry. The old partners receive the revaluation result in their old ratio.

4. Reserves and Accumulated Items

Reserves and accumulated profits/losses relating to the period before admission are adjusted among old partners in the old ratio.

5. Capital and Current Accounts

After all adjustments, capitals may be aligned with the agreed new ratio. If total capital is ₹5,00,000 and the new ratio is 5:3:2, required capitals are ₹2,50,000, ₹1,50,000 and ₹1,00,000 respectively.

🖼️ Admission Flow

Exam Practice

1. Calculate new and sacrificing ratios in three different admission cases.
2. Calculate goodwill when the incoming partner’s contribution and share are given.
3. Prepare Revaluation, Capital and Current Accounts.
4. Prepare the post-admission Balance Sheet.

MCQs

1. The incoming partner gets a share of future profits. True.
2. Goodwill compensates partners who sacrifice their share. True.
3. Pre-admission revaluation profit belongs to old partners. True.
4. Old reserves are normally adjusted among old partners. True.
5. If C receives 1/5 and A/B sacrifice equally, each sacrifices 1/10. True.