Question

Select the most appropriate answer from the alternatives given below :

Gaining ratio is calculated on ___________.

Options

• admission of a partner

• retirement of a partner

• death of a partner

• retirement or death of a partner

Answer 1

Gaining ratio is calculated on retirement or death of a partner.

Explanation: The gaining ratio is calculated for adjusting the retiring or deceased partner’s share of goodwill. The remaining partners compensate the outgoing partner (retiring or deceased as the case may be) by payment of premium for goodwill in the ratio in which they gain.