Question

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

Answer 1

At the time of retirement of a partner, the gaining ratio is calculated by subtracting the old share of each continuing partner from their new share. The formula is:

Gaining Ratio = New Share – Old Share

This ratio shows how much of the retiring partner’s share each continuing partner is gaining. It is used to adjust goodwill and other revaluation profits among the partners.