Calculation of new profit sharing ratio→
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()()calculation of gain received by remaining partners:
Naveen 's gain = 2/3 of 3 /10 = 6 /30....
Tarun's gain = 1/3 of 3 /10 = 3 /30....
()()calculation of new profit sharing ratio of remaining partners:
new ratio = old ratio + acquired share ..
Naveen' s new share = 5 /10 + 6/30 = 21 /30.
Tarun' s new share = 2/10 + 3 /30 = 9 /30 .
::::: Thus ,The new Ratio of Naveen and Tarun = 21 : 9 or 7 : 3.

Solution:

Calculation of NPSR:

NPSR stands for New Profit Sharing Ratio. It is the ratio in which the remaining partners share the profits of the firm after a partner retires or dies.

Here, Suresh retires and his share is acquired by Naveen and Tarun in the ratio of 2:1. Therefore, the new profit sharing ratio of the partners will be:

Naveen = 5 + 2 = 7
Tarun = 2 + 1 = 3

NPSR = 7:3

Explanation of Reconstitution:

Reconstitution of a partnership firm means any change in the existing partnership agreement. It can be due to various reasons such as retirement or death of a partner, admission of a new partner, change in profit sharing ratio, etc.

Retirement of a Partner:

When a partner retires from the firm, the partnership agreement needs to be reconstituted. The remaining partners can either continue the business or dissolve it. If they decide to continue the business, they need to calculate the new profit sharing ratio and adjust the capital accounts of all partners accordingly. The retiring partner is entitled to receive his share of profits till the date of retirement and his capital account is settled after all the dues are paid.

Calculation of New Profit Sharing Ratio:

The new profit sharing ratio is calculated based on the agreement between the remaining partners. They can either share the profits in the same ratio as before or change the ratio based on their mutual understanding. The new ratio is calculated by adding the shares of the remaining partners and dividing it by the total.

Adjustment of Capital Accounts:

After the new profit sharing ratio is determined, the capital accounts of all partners are adjusted. The retiring partner's capital account is settled by paying him his share of capital and profits till the date of retirement. The remaining partners contribute the necessary amount to adjust their capital accounts as per the new ratio.

Conclusion:

Reconstitution of a partnership firm is an important process that needs to be done with mutual understanding and agreement. The partners should ensure that the rights and interests of all partners are protected and the business continues to run smoothly.