what are the two deductions that may have to be made from the amount payable to a retiring partner
Answers
Explanation:
State any two deductions that may have to be made from the amount payable to the legal representative of a deceased partner. Drawings and intrest on drawingsof the deceased partner. Loan taken by the deceased partner from the firm and interest there on.
1) Loss in revaluation account.
2) Net loss for the year.
When two or more partners enter into a partnership, there is a chance that a partner may retire or may die. In such cases, we need to close the capital account of the retiring or dead partner. So, we have to give him the amount that is due to him along with his capital. The amount given to the retiring partner includes his capital, his share in the net profits, his share in the profit on revaluation, his share in the general reserves, etc. However, from the total payable amount of the retiring partner, some deductions are also done:-
1) if there is a loss on revaluation, it is deducted from his account.
2) if there is a net loss in any past years, it is deducted from his account.
3) if he has made any drawings, it is deducted from his account.
4) if drawings are made, interest on drawings is also deducted.