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A B C share profits in 3:3:2. C retires. A's new share is five eighth and B's is three eighth. What is the gaining ratio?

Answer and explanation

Correct answer: 1:0

The direct answer is B, 1:0. The old ratio A:B:C is 3:3:2, so the old shares are A=3/8, B=3/8, and C=2/8. C retires. The new shares are given as A=5/8 and B=3/8. Compare each continuing partner’s new share with the old share. A’s gain is 5/8−3/8=2/8. B’s gain is 3/8−3/8=0. Thus the gain amounts are 2/8:0. Removing the common factor 2 gives 1:0. Option B is correct. Option A, 2:0, is the un-reduced gain comparison, not the usual simplest ratio. Option C, 5:3, is the new ratio, not the gain ratio. Option D, 2:3, does not match the calculated gains. Always calculate new share minus old share for each continuing partner, then simplify the ratio.

Related tags

Goodwill-SettlementGaining-RatioZero-Gain

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