Practicing Success
The gaining ratio can be computed in the case of....................by a partnership firm. |
Retirement of partner Death of partner Change in profit sharing ratio All of these |
All of these |
The correct answer is option 4- All of these. Usually, the gaining ratio is computed when a partner decides to retire or during the death of a partner. By applying the gaining ratio formula, remaining partners would be able to estimate the amount they would have to pay to their outgoing partner or representatives of their deceased partner in the form of goodwill or premium on goodwill. It is also computed if partners change their profit-sharing ratio. On the change in profit sharing among the existing partners, one or more partners gains. Gaining ratio = New profit-sharing ratio – Old profit-sharing ratio |