Identify the correct sequence where new partner is to bring proportionate capital.
A. Calculation of Capital Balance of old partners
B. Preparation of Revaluation A/c
C. Determination of Revaluation gain/loss
D. Presentation of Treatment of Goodwill
E. Calculation of Capital to be brought in by the new partner

Choose the correct answer from the options given below:

B, C, D, A, E

The correct answer is option 4- B, C, D, A, E.

Preparation of Revaluation A/c (B): It is the first step, where the firm re-assesses the value of its assets and liabilities to reflect their current market values. This step is crucial for ensuring that the capital accounts of the existing partners are adjusted to reflect any gains or losses due to the revaluation before the new partner joins.

Determination of Revaluation gain/loss (C): After the preparation of the Revaluation Account, the firm determines whether there has been a gain (increase in asset value or decrease in liability) or a loss (decrease in asset value or increase in liability). This gain or loss is then credited or debited to the existing partners' capital accounts in their old profit-sharing ratio.

Presentation of Treatment of Goodwill (D): Goodwill is the value of the reputation of the firm, considered an intangible asset. If the firm has goodwill, its treatment in the accounts needs to be addressed before integrating a new partner. This could involve valuing the goodwill and adjusting the capital accounts of the existing partners to reflect their share of the goodwill, which the new partner must compensate for by contributing towards goodwill.

Calculation of Capital Balance of old partners (A): After revaluation adjustments and the treatment of goodwill, the capital accounts of the existing partners are updated to reflect their new balances. These balances are crucial for determining the proportionate capital that the new partner needs to bring in.

Calculation of Capital to be brought in by the new partner (E): Finally, based on the revised capital balances of the existing partners and the agreed-upon profit-sharing ratio, the amount of capital that the new partner must contribute is calculated. This ensures that the new partner's capital contribution is in proportion to the shares of the existing partners, maintaining the agreed-upon balance among the partners.