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A, B and C share profits in the ratio 6:4:5. When C retires, the new profit-sharing ratio of A and B becomes 5:4. What is A’s gaining share?

Answer and explanation

Correct answer: 7/45

A’s old share was 6/(6+4+5) = 6/15 = 2/5. After C’s retirement, A’s new share is 5/(5+4) = 5/9. Therefore, A’s gaining share = new share − old share = 5/9 − 2/5 = (25−18)/45 = 7/45. Exam tip: Calculate the gaining share as the increase in the partner’s share, not as the new share alone.

Related tags

Gaining ShareNew RatioRetirement Of PartnerPartnership AccountsProfit Sharing RatioNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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