Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
THE SURPLUS CAPITAL METHOD
Under this method, the initial amounts repaid to partners are in order to reduce their capitals to amounts such that these are now in the same ratio as that in which they share profits and losses. The amounts so repaid are referred to as “repayment of surplus capital”.For example, if there are three partners who share profits and losses equally, and have capitals of Ksh 100,000 Ksh 60,000 and Ksh 40,000, the surplus capitals will be as follows:
Once the surplus capital has been paid to partners the remaining capital, known as ‘base capital’ can be repaid. The base capital is in the same ratio as that in which profits and losses are shared. In the illustration, it is 1:1:1(equal). Any cash collected can also be distributed in profit sharing ration – 1:1:1. This will allow capital balances to fall uniformly as more and more cash is paid to partners.As a final example to this, assume that there are three partners with capitals of Ksh 60,000, Ksh 75,000 and Ksh 120,000 who share profits and losses in the ratio 3:2:1 respectively. Their surplus capitals can be illustrated as follows:
Of course, there will be a priority payment of surplus capital between the two partners who have surplus capital. The partner who will receive the first payment is said to have been repaid his ‘surplus surplus capital’.
The following question are based on above table:- Question 1 What is the change in net working capital from 2009 to 2010? Question 2 What is net capital spending for 20
what are the effects of failure to adjust entries
State the role of Accounting information Accounting information has a significant role to play in reporting the extent to which different groups have benefited from the busines
Shareholder value maximization framework The four key elements that affect the shareholder value of a company are Profitability Growth Risk Capital Mark
The dictionary explains the word 'inventory' as stock of goods. Although, inventory implies that such type of assets that will be disposed of in future in the common course of busi
Prepare the journal entries required to record the following transactions of a nongovernment, not-for-profit organization. 1. Unrestricted cash contributions received durin
Equation illustrates the relationship in between PVA n , A, K and n. So manipulating this a bit: We find that A = PVA n [(k (1 + k) n )/((1 +k) n - 1)] [(k (1 + k) n )/(
Below is the Trial Balance for Clay Employment Services, year ending December 31, 2011. Previous period's information were as follows: net receivables, $290,000 and inventory, $82
The intestate leaves one surviving spouse and children The surviving spouse is entitled to: a. The personal and household effects of the deceased absolutely; b. A life inte
Pinapple Inc. is deciding how to price its two lines of laptops, one of which is a light one for travel (which is called Light) and the other is a powerful one (called Power). Thes
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd