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

Answer and explanation

Correct answer: 4/10

The total ratio is 10, so D’s share is 4/10 and C’s old share is 3/10. D’s share is acquired by A, B and C in the ratio 1:2:1; therefore, C receives 1 out of 4 parts, i.e. (1/4) × (4/10) = 1/10. Hence, C’s new share is 3/10 + 1/10 = 4/10. Option B is incorrect because 3/10 is only C’s old share. Exam tip: Multiply the deceased or retiring partner’s share by the acquiring partner’s fraction of the gaining ratio.

Related tags

AccountancyPartnershipDeath Of PartnerNew Profit Sharing RatioGaining RatioNew RatiosReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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