Illustration 5 Hari Lal and Jay have been in partnership for a number of years, sharing profits fosses in the ratio of 2.2.1 as wholesale stationers trading under the name 'Hari Brothers. They decide to convert their partnership into a limited company (with effect from 1 January, 2013) to be known as Hari Ltd. 028 Bank Immediately prior to this conversion the balance sheet of partnership as at 31 December 2012 was as follows: Balance Sheet As on 31st December 2012 Liabilities Assets Capital accounts Fixed assets Hari 70,000 (at written down value) Lal 30,000 Land & Buildings 50,000 Jay 20.000 120.000 Plant & Machinery 30,000 Current accounts Motor vehicles 20.000 Hari 7.000 Current Assets Lal 5.000 Inventories 60.000 Jay 3.000 15,000 Debtors 25,000 Current liabilities Axis Bank account 5,000 Creditors 25,000 Dena Bank account 20,000 45.000 Long-term liabilities Loan-Hari 3,000 Loan-Gopi Ltd. 7.000 10,000 1,90,000 1,90,000 The terms of conversion are that Hari Ltd. is to take over the assets and liabilities of Hari Brothers as follows: Valuation for take-over