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After a partner retires, if a remaining partner’s new profit-sharing share is equal to his old share, what will be his gaining share?

Answer and explanation

Correct answer: Zero

Gaining share = New share − Old share. Since the new share and old share are equal, their difference is zero; therefore, the partner has no gain. Choosing the old or new share would be incorrect because the gaining ratio measures only the increase in the share. Exam tip: Always subtract the old ratio from the new ratio to calculate the gaining ratio.

Related tags

Gaining RatioRetirement Of PartnerNew RatioOld RatioPartnership AccountsNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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