Partnership Change in PSR Notes5

Study Material & Notes for the Chapter 3

Partnership - Change in Profit Sharing Ratio


     Applicable when Partners decide that the capitals shall be in their profit-sharing ratio


  1. Compute the new profit-sharing ratio
  2. Compute partners’ existing capital post adjustment of Revaluation, Reserves Accumulated losses & Goodwill etc.
  3. Determine firm total capital which is the sum-total of existing capital of all the partners
  4. Compute the New Capital of each partner by multiplying Total Capital with his new share
  5. Compare the new capital with existing capital and any shortfall to be brought in and excess is refunded
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