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Change in profit sharing ratioWhen there is a change in profit sharing ratio, it means that some of the partners will get higher profits based on the new ratios in the future while others will loose or will get lower profits.Those who will get higher profits therefore need to pay for the higher profits whereas those who will get lower profits thus need to be compensated for the reduction in their profit share.To achieve this objective, goodwill is normally introduced in the accounts by crediting the partners capital accounts according to their old profit sharing ratio (PSR) and written off again by debiting the partners capital accounts according to their new PSR.
Suppose that the real risk-free rate, r*, is 4% and that inflation is usual to be 8% in Year 1, 5% in Year 2, and 4% thereafter. Suppose also that all Treasury securities are highl
Aristo Ltd uses a system of absorption costing. The product passes through a machining department and an assembly department before it is completed. The assembly department is labo
Procedure after Winding-up Order 1. A copy of the order must be filed by the company with the registrar s.227. 2. The company must deliver a statement of affairs to the Offici
In the above illustration we have consider how the future value modify along with the modification in frequency of compounding. So as to understand the relationship among effectual
US GAAP follows the Historical Cost Concept in valuing the cost of Long-Term Assets. Explain this principle and how it compares to the standards used in the reporting of Long-Term
Broadway Scripts is a service-type enterprise in the entertainment field, and its manager, Joe Numbers, has only a limited knowledge of accounting. Joe prepared the following balan
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Q. What is Credit Analysis? Potential credit customers must be carefully screened using such methods as bank references, trade references, credit reports from credit reference
Debra Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 20 years are callable 3 years from now at a price of $1,075. The bonds sell at a price of
You are an analyst in the corporate finance department of Pet Products, Inc. You have been asked to analyze a potential new product to be introduced. The beef-flavored water will b
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