Question

on 1.1.2016 a wants to retire b and c agreed to continue at 2.1 joint life policy was taken on 1.1.2010 rs100000 and it's surrender value as on 31.12.2015 was rs 25000 for purpose of a retirement goodwill raised for 100000.sundry fixed asset was revalued for 110000 ,but b and c did not preferre to show such increase in assets in the balance sheet .also they agreed to bring necessary cash to discharge 50 percentage of A's claim to make the bank balance rs 25000 and to make their capital proportionate ​

Answer 1

Answer:

A Joint Life Policy (JLP) is an insurance policy which is taken out by the partnership firm on the joint lives of all the partners. The amount of policy is payable by the Insurance Company either on the death or on maturity of policy, whichever is earlier. The firm pays annual premium to the insurer against the policy.

At the time of retirement of a partner, the firm get surrender value of policy in old profit sharing ratio.

In the given question policy value is Rs. 250000 and surrender value is Rs.50000. Therefore, surrender value i.e., Rs. 50000 is credited to all partner's capital A/c in their old ratio