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When A, B and C share profits in the ratio 3:3:2 and A retires, by which fraction is A's goodwill share calculated?

Answer and explanation

Correct answer: 3/8

A retiring partner’s goodwill share is calculated using that partner’s fraction in the old profit-sharing ratio. The old ratio is 3:3:2, so the total number of parts is 3 + 3 + 2 = 8. A has three of these eight parts; therefore A’s goodwill fraction is 3/8. The denominator must include all partners, including C, so 3/6 is incorrect because it omits C’s two parts. The fraction 2/8 is C’s old share, not A’s, and 1/8 does not represent any partner’s share in the stated ratio. Thus option A is the only fraction that correctly reflects A’s old entitlement and is the correct answer.

Related tags

Old Profit RatioFractionRetiring Partner GoodwillGoodwill SettlementReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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