1.

P, Q and R sharing profits and losses in the ratio of 3 : 2 : 1, decide to share profits and losses equally with effect from 1st April, 2017. Following is an extract of their Balance Sheet as at 31st March, 2017: LiabilitiesRsAssetsRsInvestment Fluctuation Reserve30,000Investments (At Cost)5,00,000 Show the accounting treatment under the following alternative cases: Case (i) If there is no other information. Case (ii) If the market value of Investments is Rs 5,00,000. Case (iii) If the market value of Investments is Rs 4,88,000. Case (iv) If the market value of Investments is Rs 4,46,000. Case (v) If the market value of Investments is Rs 5,06,000.

Answer»

P, Q and R sharing profits and losses in the ratio of 3 : 2 : 1, decide to share profits and losses equally with effect from 1st April, 2017. Following is an extract of their Balance Sheet as at 31st March, 2017:

LiabilitiesRsAssetsRsInvestment Fluctuation Reserve30,000Investments (At Cost)5,00,000

Show the accounting treatment under the following alternative cases:

Case (i) If there is no other information.
Case (ii) If the market value of Investments is Rs 5,00,000.
Case (iii) If the market value of Investments is Rs 4,88,000.
Case (iv) If the market value of Investments is Rs 4,46,000.
Case (v) If the market value of Investments is Rs 5,06,000.



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