The new partner is required to compensate the old partners for their loss of share in the super profits of the firm for which he brings in an additional amount as premium for goodwill. This amount is shared by the existing partners in which ratio?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Sacrificing ratio
The premium for goodwill brought by a new partner is compensation to the old partners for the share of profit they give up in his favour. So it is shared in the ratio in which they gave up their shares, the sacrificing ratio.
Why the other options are incorrect
Option (1) New ratio — Incorrect. The new ratio decides how future profits are shared, including the new partner’s share; he cannot be paid out of his own premium.
Option (2) Old ratio — Incorrect. The old ratio is used only when the old partners sacrifice in that same ratio; when they give up unequal parts, the premium follows the sacrifice, not the old shares.
Option (4) Gaining ratio — Incorrect. The gaining ratio applies on retirement or death, where continuing partners gain the outgoing partner’s share and compensate him; on admission the old partners lose, they do not gain.
NCERT (2026-27 edition): |