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

Answer and explanation

Correct answer: 5:5

A’s profit share was 2. Since B and C acquire it equally, each receives an additional share of 1. Therefore, B’s new share is 4+1=5 and C’s new share is 4+1=5. Hence, the new ratio is 5:5, or 1:1. Exam tip: When the outgoing partner’s share is acquired equally, add half of that share to each acquiring partner’s original share.

Related tags

Partner RetirementPartner DeathNew Profit Sharing RatioEqual AcquisitionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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