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While finding the new ratio, if the gained share is already given, how is the new share of a continuing partner found?

Answer and explanation

Correct answer: Old share plus the given gained share

The governing concept is the meaning of a gain after retirement or death of a partner. A continuing partner receives an additional portion of the retiring or deceased partner’s share. Consequently, the partner’s final or new share must include both components: the share originally held and the extra share acquired. In symbols, new share = old share + gained share. For example, if a partner originally has 3/10 and gains 1/10, the new share is 4/10, not 2/10 or 1/10. Option A expresses this rule accurately. Option B would reduce the partner’s entitlement, C ignores the original ownership, and D ignores the benefit received from the outgoing partner.

Related tags

New ShareGained ShareRetirement MethodNew RatiosReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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