in patnership...when there is retirement of a patner the goodwill and profit and all the revalued assets are shared in existing ratio or gaining ratio....
4 Replies
anil shah
(STUDENT)
(85 Points)
Replied 11 December 2015
get this link
https://gradestack.com/Fundamentals-of/Retirement-of-a-Partner/Calculation-of-New-Profit/22512-4466-55775-study-wtw
ROSHAN PAUL JOSEPH
(CA Final student)
(311 Points)
Replied 11 December 2015
In the event of retirement, the retiring partner wants to get his share, out of the contribution he made during his term of service. What business owns is achieved with the combined effort of all the partners. And therefore it should be in existing ratio.
Due to his retirement the business cant sell his portion of share of assets inorder to pay him.
So the exisitng partners should bring in fund. It will not be fair if the remaining partners contribute equally, because, after retirement one or few other partners may have the benefit by increase in profit share; and therefore it should be on gaining ratio.
Hope you understood the relevance of "existing ratio" and " gaining ratio" in the event of retirement.
Jeet Vachharajani
(Student)
(417 Points)
Replied 12 December 2015
It is divided on the basis of the PSR that is decided as per the partnership deed.In the absence of any such agreement,they will be divided in the Capital Ratio.
Jeet Vachharajani
(Student)
(417 Points)
Replied 12 December 2015
*Gaining ratio=New ratio - old ratio
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