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In the case of insolvency of a partner, how is the loss shared among the solvent partners according to Garner vs. Murray?
- a)In the ratio of their profit-sharing ratio
- b)In proportion to their final claims
- c)In the ratio of their original capital
- d)Equally among all partners
Correct answer is option 'C'. Can you explain this answer?
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According to Garner vs. Murray, in case of insolvency of a partner, the loss is shared among the solvent partners in proportion to their original capital contributions.
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Garner vs. Murray - Sharing Loss among Solvent Partners in Case of Insolvency of a Partner
In the case of insolvency of a partner, the loss is shared among the solvent partners according to the Garner vs. Murray rule. This rule specifies that the loss should be shared in the ratio of the partners' original capital contributions.
Example:
Let's consider a partnership where Partner A has invested $50,000, Partner B has invested $30,000, and Partner C has invested $20,000. If Partner C becomes insolvent, the loss will be shared in the ratio of 50:30:20.
This method of sharing the loss based on the partners' original capital contributions ensures a fair distribution of the financial impact of a partner's insolvency. It aligns with the principle of equity in partnerships and helps maintain trust and transparency among the partners.
In the case of insolvency of a partner, the loss is shared among the solvent partners according to the Garner vs. Murray rule. This rule specifies that the loss should be shared in the ratio of the partners' original capital contributions.
- Original Capital: The original capital contributed by each partner is the basis for determining how the loss should be shared. This means that partners who have invested more capital initially will bear a higher proportion of the loss.
Example:
Let's consider a partnership where Partner A has invested $50,000, Partner B has invested $30,000, and Partner C has invested $20,000. If Partner C becomes insolvent, the loss will be shared in the ratio of 50:30:20.
- Loss Sharing: In this example, if the total loss due to Partner C's insolvency is $10,000, the loss sharing would be as follows:
- Partner A: $5,000 (50% of $10,000)
- Partner B: $3,000 (30% of $10,000)
- Partner C: $2,000 (20% of $10,000)
This method of sharing the loss based on the partners' original capital contributions ensures a fair distribution of the financial impact of a partner's insolvency. It aligns with the principle of equity in partnerships and helps maintain trust and transparency among the partners.
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In the case of insolvency of a partner, how is the loss shared among the solvent partners according to Garner vs. Murray?a)In the ratio of their profit-sharing ratiob)In proportion to their final claimsc)In the ratio of their original capitald)Equally among all partnersCorrect answer is option 'C'. Can you explain this answer?
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In the case of insolvency of a partner, how is the loss shared among the solvent partners according to Garner vs. Murray?a)In the ratio of their profit-sharing ratiob)In proportion to their final claimsc)In the ratio of their original capitald)Equally among all partnersCorrect answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about In the case of insolvency of a partner, how is the loss shared among the solvent partners according to Garner vs. Murray?a)In the ratio of their profit-sharing ratiob)In proportion to their final claimsc)In the ratio of their original capitald)Equally among all partnersCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the case of insolvency of a partner, how is the loss shared among the solvent partners according to Garner vs. Murray?a)In the ratio of their profit-sharing ratiob)In proportion to their final claimsc)In the ratio of their original capitald)Equally among all partnersCorrect answer is option 'C'. Can you explain this answer?.
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