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A and B share profits in the ratio 3:1. C is admitted for a 1/4 share of profits, taken equally from A and B. What will be A and B’s sacrificing ratio?

Answer and explanation

Correct answer: 1:1

C’s 1/4 share is taken equally from A and B, so each partner sacrifices 1/4 × 1/2 = 1/8. Therefore, the sacrificing ratio of A and B is 1/8 : 1/8 = 1:1. Exam tip: calculate each old partner’s sacrifice from the new partner’s share; do not use the old profit-sharing ratio when the question states that the share is taken equally.

Related tags

Sacrificing RatioAdmission Of PartnerGoodwill AccountingPartnership AccountsReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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