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A, B and C share profits in the ratio 3:4:2. After C’s death, A and B acquire C’s share in the ratio 2:1. What will be the new profit-sharing ratio of A and B?

Answer and explanation

Correct answer: 13:14

C’s original share is 2/9. A and B acquire it in the ratio 2:1, so A gets 4/27 and B gets 2/27. A’s new share is 3/9 + 4/27 = 13/27, while B’s new share is 4/9 + 2/27 = 14/27. Therefore, the new ratio is 13:14. Exam tip: Add the acquired share to each partner’s old share; the acquisition ratio alone is not the new ratio.

Related tags

AccountancyPartnershipReconstitutionNew RatioDeath Of PartnerAcquiring RatioNew RatiosReconstitution Retirement Or Death Of A Partner

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