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The old profit-sharing shares of two remaining partners are \(5/12\) and \(1/4\), respectively, while their new shares after reconstitution are \(7/12\) and \(5/12\), respectively. What is their gaining ratio?

Answer and explanation

Correct answer: 2:2

Gaining ratio = New share − Old share. The first partner’s gain is \(7/12-5/12=2/12\). The second partner’s old share is \(1/4=3/12\), so the gain is \(5/12-3/12=2/12\). Therefore, the gaining ratio is \(2/12:2/12=2:2\), which is also expressible in simplified form as \(1:1\). In an exam, calculate each partner’s gain separately; using the ratio of new shares alone would be incorrect.

Related tags

Gaining RatioPartner RetirementOld And New SharesPartnership ReconstitutionAccountancy Class 12New RatiosReconstitution Retirement Or Death Of A PartnerAccountancy

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