In which situation is there no need to compute a new profit sharing ratio among the remaining partners after the retirement or death of a partner?
Situation a - The continuing partners acquire the share of retiring or deceased partners in the old profit sharing ratio.
Situation b - The continuing partners may acquire the share in the profits of the retiring/deceased partner in a proportion other than their old ratio.

Situation (a)

The correct answer is option 1- Situation (a).

In situation (a), there is no need to compute a new profit sharing ratio among the remaining partners after the retirement or death of a partner. This is because the continuing partners acquire the share of the retiring or deceased partners in the old profit sharing ratio. In the absence of any information regarding a new profit sharing ratio, it is assumed that they will acquire it in the old profit sharing ratio and share future profits in their old ratio.

In situation (b), there is a need to compute a new profit sharing ratio among the remaining partners after the retirement or death of a partner. The continuing partners may acquire the share in the profits of the retiring/deceased partner in a proportion other than their old ratio, In that case, there is need to compute the new profit sharing ratio among them.  In such a case, the new share of profit will be calculated as follows: New share of Continuing Partner = Old Share + Acquired share from the Outgoing Partner.