A, B and C are partners in a firm sharing profits and losses in the ratio of 1:1:2. They provide the following information from which you are required to compute net income of the firm assuming that salary and interest a

Section 78(1): Where a change occurs in the constitution of firm, on account of retirement or death of partner, the proportionate loss of the retired or deceased partner shall not be carried forward. However, this section shall not apply in case of unabsorbed depreciation accordingly. Computation of Total Income for the AY 2021-22 Particulars Amount (₹) Amount (₹) Income before adjusting brought forwarded loss and depreciation 1,20,000 Less: Brought forwarded loss (excluding unabsorbed depreciation) 80,000 Less: Loss which cannot be set off (working note 1) (30,000) (50,000) Less: Unabsorbed depreciation (40,000) (90,000) Total Income 30,000 Working Note 1: Computation of share of C in brought forward loss and loss which cannot be set off. Particulars Amount (₹) Total unabsorbed brought forwarded loss 1,20,000 Less: Unabsorbed depreciation 40,000 Brought forwarded loss excluding depreciation 80,000 Share of C in aforesaid loss (₹ 80,000/4 * 2) 40,000 Less: Share of Mr. C in current profit before adjusting brought forwarded loss and depreciation [(₹ 1,20,000/12*2)*2/4] (10,000) Loss which cannot be set-off (30,000)