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A, B, C and D share profits in the ratio 2:2:3:3. When D retires, A, B and C acquire D’s share equally. What will be A’s new share of profit?

Answer and explanation

Correct answer: 3/10

The total ratio is 2+2+3+3=10, so D’s old share was 3/10. Since D’s share is acquired equally by A, B and C, each receives 3/10 ÷ 3 = 1/10. Therefore, A’s new share is 2/10 + 1/10 = 3/10. Option B is only A’s old share and does not include the share acquired from D. Exam tip: Always add the retiring partner’s acquired share to the continuing partner’s old share.

Related tags

Partnership ReconstitutionPartner RetirementNew Profit Sharing RatioAcquisition Of ShareNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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