How is gaining ratio calculated at the time of retirement of a partner from the partnership firm?

New share - Old share

The correct answer is option 2- New share - Old share.

Gaining Ratio is calculated as New share - Old share.

When a partner retires from a partnership, the gaining ratio is used to determine the new profit-sharing ratio among the remaining partners. The gaining ratio is calculated by deducting old ratio from new ratio. The retiring or deceased partner is entitled to his share of goodwill at the time of retirement/death because the goodwill has been earned by the firm with the efforts of all the existing partners.