Study Material & Notes for the Chapter 7
Partnership - Death of a partner
I. DEATH OF A PARTNER – BASIC CONCEPTS
A. Meaning of Death of a Partner
- Death of a partner is a compulsory retirement
- Death of a partner may occur any time unlike the retirement which normally takes place at the end of an accounting period.
B. New Profit-Sharing Ratio
New Profit-Sharing ratio is the ratio in which the continuing/remaining partners decides to the share the profits of the firm in future. It is decided as per the mutual agreement amongst the continuing/remaining partners.
C. Gaining Ratio:
The ratio in which remaining partners acquire retiring partner’s profit share is known as gaining ratio.