Gce Model Questions Vol1 2021 Financial Accounting Question 27

Practice objective / multiple choice question 27 from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2021 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 27 GCE_MODEL_QUESTIONS_VOL1 • 2021 • FINANCIAL_ACCOUNTING • objective

Three partners A, B and C share profits in the ratio 3:2:1. The partnership earned a profit after tax of £120,000 before a new partner D was admitted. D brings in goodwill of £30,000 and a cash contribution of £20,000 for a 20% share of future profits. Existing partners revalue the building from £50,000 to £80,000 and the machinery from £30,000 to £25,000. The revaluation surplus/deficit is to be shared among A, B and C in their old profit‑sharing ratio. After revaluation, D's share is 20% and the remaining 80% is shared among A, B and C in the old ratio. Calculate: (a) the amount of revaluation surplus allocated to each existing partner; (b) the amount of goodwill credited to each existing partner's capital account; (c) the new profit‑sharing percentages for the next year.

Answer Options

A. Revaluation surplus - A £12,500, B £8,333.33, C £4,166.67; Goodwill - A £13,000, B £8,000, C £9,000; New profit‑sharing - A 40%, B 26⅔%, C 13⅓%, D 20%
Correct Answer B. Revaluation surplus - A £12,500, B £8,333.33, C £4,166.67; Goodwill - A £12,500, B £8,333.33, C £4,166.67; New profit‑sharing - A 40%, B 26⅔%, C 13⅓%, D 20%
C. Revaluation surplus - A £10,000, B £6,666.67, C £3,333.33; Goodwill - A £10,000, B £6,666.67, C £3,333.33; New profit‑sharing - A 40%, B 26⅔%, C 13⅓%, D 20%
D. Revaluation surplus - A £13,000, B £7,500, C £4,500; Goodwill - A £14,000, B £9,000, C £7,000; New profit‑sharing - A 38%, B 28%, C 14%, D 20%
Correct Answer
B
Correct Option:
Revaluation surplus - A £12,500, B £8,333.33, C £4,166.67; Goodwill - A £12,500, B £8,333.33, C £4,166.67; New profit‑sharing - A 40%, B 26⅔%, C 13⅓%, D 20%

About This Question

This is Gce Model Questions Vol1 2021 Financial Accounting Question 27. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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