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प्रश्न
A and B sharing profits and losses in the ratio of 3 : 2, decide to admit C for `1/3`rd share. On this date, their Balance Sheet disclosed the following items:
| ₹ | |
| Investments Fluctuation Reserve | 40,000 |
| Investments (at cost) | 3,00,000 |
Show the accounting treatment in the following cases:
Case (i) If the market value of investments is ₹ 2,90,000 Case (ii) If the market value of investments is ₹ 2,45,000 Case (iii) If the market value of investments is ₹ 3,00,000 Case (iv) If the market value of investments is ₹ 3,25,000
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उत्तर
| Journal Entry | ||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| (i) | Investments Fluctuation Reserve A/c ...Dr. | 40,000 | ||
| To Investments A/c | 10,000 | |||
| To A’s Capital A/c | 18,000 | |||
| To B’s Capital A/c | 12,000 | |||
| (Decrease in value of investments adjusted and surplus reserve distributed among partners in 3 : 2 ratio) | ||||
| (ii) | Investments Fluctuation Reserve A/c ...Dr. | 40,000 | ||
| Revaluation A/c ...Dr. | 15,000 | |||
| To Investments A/c | 55,000 | |||
| (Fall in market value of investments adjusted through reserve and remaining loss debited to partners’ capital accounts in 3 : 2 ratio) | ||||
| (ii) | A’s Capital A/c ...Dr. | 9,000 | ||
| B’s Capital A/c ...Dr. | 6,000 | |||
| To Revaluation A/c | 15,000 | |||
| (Loss on revaluation transferred to old partners’ capital accounts) | ||||
| (iii) | Investments Fluctuation Reserve A/c ...Dr. | 40,000 | ||
| To A’s Capital A/c | 24,000 | |||
| To B’s Capital A/c | 16,000 | |||
| (Entire reserve distributed among partners in 3 : 2 ratio as there is no change in value of investments) | ||||
| (iv) | Investments Fluctuation Reserve A/c ...Dr. | 40,000 | ||
| Investments A/c ...Dr. | 25,000 | |||
| To A’s Capital A/c | 39,000 | |||
| To B’s Capital A/c | 26,000 | |||
| (Increase in value of investments and balance of reserve distributed among partners in 3 : 2 ratio) | ||||
Working Note:
Case (i): Market Value = ₹ 2,90,000
Book value = ₹ 3,00,000
= 3,00,000 − 2,90,000
= 10,000
Investments Fluctuation Reserve = 40,000 − 10,000
= 30,000
Case (ii): Market Value = ₹ 2,45,000
Book value = ₹ 3,00,000
= 3,00,000 − 2,45,000
= 55,000
Investments Fluctuation Reserve will be used up fully = 40,000
Remaining loss = 55,000 − 40,000
= 15,000
Case (iii): Market Value = ₹ 3,00,000
No change in value.
Distribute entire = ₹ 40,000
Case (iv): Market Value = ₹ 3,25,000
Book value = ₹ 3,00,000
Increase = ₹ 25,000
Investments Fluctuation Reserve = 40,000
Investments Fluctuation Reserve = 40,000 − 10,000
= 30,000
Investments Fluctuation Reserve used to absorb increase (no adjustment to investments).
Entire Investments Fluctuation Reserve of ₹ 40,000 no longer needed, so distribute the whole ₹ 40,000 + ₹ 25,000
profit = ₹ 65,000
