Question

Distinguish between sacrificing ratio and gaining ratio.

Answer 1

Basis	Sacrificing ratio	Gaining ratio
1. Meaning	It is the proportion of the profit which is sacrificed by the old partners in favor of new partners.	It is the proportion of the profit which is gained by the continuing partners from the retiring partner.
2. purpose	It is calculated to determine the amount to be adjusted towards goodwill for the sacrificing partner.	It is calculated to determine the amount to be adjusted towards goodwill for the gaining partner.
3. Time of Calculation	It is calculated at the time of admis¬sion of a new partner.	It is calculated at the time of retirement of a partner.
4. Method of Calculation	It is the difference between the old ratio and the new ratio	It is the difference between the new ratio and the old ratio.
	Sacrificing ratio = old profit sharing ratio – New profit sharing ratio	Gaining ratio = New profit sharing ratio – Old profit sharing ratio