Change in Profit Sharing Ratio of Partners
Change in profit sharing ratio of partners involve sacrifice or gain made by the partners, where the total of sacrifice must be equal to total of gain.
10
02, 2016
10
02, 2016
Calculation of New Profit Sharing Ratio
There is change in the profit sharing ratio of the existing partners also, depending on the partnership agreement.
10
02, 2016
Sacrifice Ratio
It is the ratio in which the old partners sacrifice their share in favor of a new partner. Sacrificing ratio = Old Profit sharing ratio - New Profit sharing ratio [Sacrifice=old share-new share]
10
02, 2016
Gaining Ratio
This is the ratio of share acquired by the remaining partners, from the retiring partner.Gaining ratio = New Profit sharing ratio - Old Profit sharing ratio [Gain=New share-Old share]