Introduction
Admission of a partner is reconstitution of the firm because with the admission of a partner, existing partnership deed or agreement ends and new agreement among all the partners (including incoming or new partner) comes into force.
According to section 31 of the Indian Partnership Act, 1932, a person can be admitted as a partner. If it is so agreed in the partnership Deed, or in the absence of the agreement, if all the partners agree to admit the partner
After admission, the new partner gets following two rights:
1.Right to share future profits of the firm
2.Right to share in the assets of the firm.
Adjustments Required on Admission of a Partner:-
1.Change in Profit-sharing Ratio: Determining New Profit-sharing Ratio and Sacrificing Ratio.
2.Valuation and Accounting of Goodwill.
3.Adjustment of Gain from revaluation of assets and reassessment of liabilities.
4.Adjustment of Deferred Revenue Expenditure .
5.Adjustment of reserve accumulated profit and losses.
6.Adjustment of capital
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