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An existing partner’s old profit-sharing share is \(\frac{3}{10}\), and the new share after reconstitution is \(\frac{1}{4}\). What does this indicate?

Answer and explanation

Correct answer: Sacrifice \(\frac{1}{20}\)

Sacrifice = Old share − New share. Here, \(\frac{3}{10}=\frac{6}{20}\) and \(\frac{1}{4}=\frac{5}{20}\), so the sacrifice is \(\frac{6}{20}-\frac{5}{20}=\frac{1}{20}\). Therefore, option A is correct. Since the new share is lower than the old share, it represents sacrifice, not gain. Exam tip: In admission questions, calculate each existing partner’s sacrifice as old share − new share.

Related tags

Goodwill AccountingSacrifice RatioPartner AdmissionShare CalculationReconstitutionReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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