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Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5th share in the profits of the firm. Ajay brings ₹ 5,00,000 as his share of capital. The value of the total assets of the firm was ₹ 15,00,000 and outside liabilities were valued at ₹ 5,00,000 on that date. Give necessary journal entry to record goodwill at the time of Ajay’s admission. Also show your workings. |
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Answer» Profit sharing refers to various incentive plans INTRODUCED by BUSINESSES that provide direct or indirect payments to employees that depend on COMPANY's profitability in addition to employees' regular salary and bonuses. In PUBLICLY TRADED companies these plans typically amount to allocation of shares to employees. |
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