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?

Sacrificing ratio

Correct answer: Option (3) → Sacrificing ratio

Concept: Treatment of premium for goodwill on admission, per Reconstitution of a Partnership Firm – Admission of a Partner.

The incoming partner brings a premium for goodwill to compensate the old partners for the share of super profits they surrender. This premium is credited to the old partners in the ratio in which they forgo their shares – the sacrificing ratio (Old share – New share) – not the old, new or gaining ratio. Hence Option (3).