Question

On retirement/death of a partner, the remaining partner(s) who have gained due to change in profit sharing ratio should compensate the ______

Options

• Retiring partners only.

• Remaining partners (who have sacrificed) as well as retiring partners.

• Remaining partners only (who have sacrificed).

• None of these.

Answer 1

On retirement/death of a partner, the remaining partner(s) who have gained due to a change in profit sharing ratio should compensate the Remaining partners only (who have sacrificed).

Explanation:

When a partner retires or dies, his or her goodwill is valued according to an agreement among the partners, with the continuing partners (who have gained due to the acquisition of a share of profit from the retiring/deceased partner) compensating for his or her share of goodwill in their gaining ratio.