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A and V are partners sharing profits and losses in 2:1.with effect from 1 April 2015 they agreed to share the profits equally.on that date the balance sheet of the firm showed 75000 as workmen compensation reserve against which there was no liability .V expressed his opinion that it should be credited to the capital accounts equally.However, Anand was of the opinion that it should be credited to the capital accounts in 2:1.He was able to convince V.Explain what argument must have been put forward by Anand to which V agreed/ |
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Answer» A would have given the argument that the reserve was created out of profits when their profit sharing ratio was 2:1.hence it shoud be credited in old profit sharing ratio. |
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