To ascertain the exact amount payable to the retiring partner, some a…

The correct answer is Option (4) → A, C, B, D

The amount payable to a retiring partner is his capital (and current account) balance after every adjustment for revaluation, goodwill and reserves. The steps run in the order in which each figure becomes known: the adjustments are worked out, the balance is brought up to date, and only then is the amount settled.

• A. Preparation of Revaluation A/c. The assets and liabilities are revalued and the gain or loss on revaluation is worked out; his share of it is one of the items of the sum due.

• C. Determining the balance of the retiring partner’s capital/current A/c as per the given balance sheet. His opening balance is taken from the balance sheet; this is the figure to which the adjustments are added.

• B. Adjustment with regard to settlement of undistributed profit, goodwill etc His share of goodwill, reserves and the revaluation result is credited to that balance, giving the amount due.

• D. Making periodic payments to the retiring partner. Settlement of the amount due comes last in the book’s list as well: once the amount due is known, it is paid at once or in instalments.

Note: The book’s list of accounting aspects on retirement takes treatment of goodwill (2) before revaluation (3); both are adjustments made before the amount due is settled, and their order does not change that amount. Step (C) can also be placed before step (A), because the balance as per the balance sheet is the figure to which the revaluation result is later added; the answer given by NTA follows the order used above.