first lest less let us understand the change in the profit sharing ratio which has already been discussed in detail in the earlier module on partnership a quick revision a quick revision with the help of a couple of examples to understand what happens here SR is equal to o R minus n R we are saying the sacrificing ratio is nothing but the old ratio minus the new ratio old ratio the ratio that the partners had before the admission of the new partner that is the old ratio then whether the new partner comes in now there is a new ratio amongst the partners this old ratio minus the new ratio when that is positive what we get is called the sacrificing ratio if all ratio minus new ratio in case in any situation on the admission of a partner is negative it would mean that there is a gaining ratio what it would mean is that with the admission of a new partner there has been a reconstitution in such a manner that one of the old partners also stands to gain in future he is getting a greater share of the profits in future that is also possible though usually more often when a partner comes comes into the partnership is admitted in finding partnership the old partners sacrifice some share towards the new partners to the new partner who is coming so what is sacrificing ratio the of the old ratio minus the new ratio is the amount of sacrifice which is made and the sacrificing ratio is actually the ratio of this sacrifice which is made let us take an example a and B are equal partners C is admitted into the partnership for 1/5 share what would be the new ratio and what is thus revising ratio so what was the old ratio equal partners old ratio was therefore half-and-half or this is a and B what is the new ratio no since C is admitted for 1/5 C's share is 1/5 C's share is 1/5 what is the remaining share remaining share is therefore 4/5 if nothing is mentioned the profit sharing ratio among the old partners will be the same as it was before the admission of the park so 4/5 would be shared equally 4/5 half of 4/5 for by 10 or 2 by 5 and 2 by 5 would be the new ratio of the old partners new ratio of the old partners 2 by 5 and 2 by 5 I repeat the this entire discussion has will be discussed in detail this entire change in profit sharing ratio sacrifice the gain etc has already been discussed in our earlier module in partnership nevertheless here C is admitted for 1/5 share balance remaining share is 4/5 the profit sharing ratio among the old partners continues to be the same between them if nothing is mentioned therefore 4/5 will now be shared equally between a and B therefore that becomes 2/5 and 2/5 2/5 4 8 and 2/5 for me so the new ratio is now 2 is to 2 is to 1 2 by 5 2 by 5 and 1 by 5 if we deduct what does the sacrifice which is mean the sacrifice which is made is if we take a denominator of ten what are we doing we are doing all ratio minus new ratio so 1/2 minus 2 by 5 take 10 therefore we get 10 divided by 2 5 5 minus 5 10 divided by 5 2 2 into 2 4 that gives us 1 by 10 and 1 by 10 so the sacrif a has sacrificed 1/10 of a share via sacrificed one tenth of its share 1/10 plus 1/10 added up to 2 by 10 being one fifth being the share of see therefore what is the sacrificing ratio the sacrificing ratio is one tenth is to 1/10 or one is to one it may be noted that if the ratio between the old partners has not changed between them has not changed they were equal partners before and even now their ratio is the same 2 is 2 5 2 is 2 5 if this if the ratio between the old partners does not change even after the admission of the new partner then the sacrificing ratio will be the same as their old ratio will be the same as their pollination though we work this out and concluded that if the sacrificing ratio is 1 is to 1 so what is the new ratio the new ratio is 2 is to 2 is to 1 what is the sacrificing ratio it is equal or 1 is to 1 I repeat whether then the ratio between the old partners remains the same we need not do this computation we know that the sacrificing ratio would also be equal would be the same as the old pressure let us consider another example a B and C are equal partner and D is admitted and the new ratio is 2 is to 2 is to 1 is to 1 so here if you notice what was the old ratio a B and C are equal partners between which means the ratio was 1 is to 1 is to 1 between them but now in the new situation where D has been admitted the profit-sharing ratio is 2 is to 2 is to 1 is to 1 2 is to 2 is to 1 there is a change in the profit-sharing ratio of the among the old partners after the admission of D the profit-sharing ratio was equal before now it is 2 is to 2 is to 1 between a B and C between the old partners in such a case we have to compute the sacrificing ratio what would be the new ratio and what is the sacrificing ratio what is the new ratio is already given to us fold ratio equal so 1/3 1/3 and 1/3 new ratio also given to us actually 2 is to 2 is to 1 is to 1 2 to 4 plus 1 plus 1 so that is sixth therefore it is 2 by 6 2 by 6 1 by 6 and 1 by 6 if we deduct so the new ratio 2 by 6 2 by 6 1 by 6 1 by 6 of course 2 by 6 is is 1/3 there is no change in the ratio nevertheless if we have to compute we would get the sacrifice as you take 6 you get 2 minus 2 therefore you get 0 there is no sacrifice because mind you 2 6 is nothing but 1/3 so there has been no change in the ratio of a and B a and B do not lose anything they had one third before they continue to have third share now therefore the entire sacrifice is being made by SI anti sacrifice is being made by sea so let us see 1/3 minus 1/6 we take 6 common 6 divided by 3 give it 2 minus 6 divided by 6 1 that is 1 that is 1/6 so what is the sacrifice sacrifice here is well well and sacrifice here this 1 by 6 so si has sacrificed 1/6 which has been gained by so what is the new ratio given to us 2 is to 2 is to 1 is to 1 what is the sacrificing ratio there is no ratio as such the entire sacrifice has been made by sea so if there is any adjustment with respect to goodwill if there is any adjustment with respect to revaluation of assets and liabilities then only film needs to be compensated in case of any profits any gains and we continue will continue to get the same Wilkin will get continues to get the same profits same share of profit and need no further compensation let us take one more example a and B carry on business and share profits and losses in the ratio 3 is to to their respective capitals are one lakh twenty thousand and fifty four thousand C is admitted for one-third share in profit and brings 75 thousand as his share of capital capitals of a and B are to be adjusted according to C's shape calculate the amount refunded to a what are the options a 30,000 B 32,000 C 15,000 and B 28,000 so when there is a change in the profit sharing sure sometimes the partners may agree to also adjust their capitals in such a manner that they are at par with the profit-sharing pressure it is not an essential requirement it is as per the agreement so what has been decided here that capitals of a and B will be adjusted according to sees shape C is admitted for 1/3 shade and brings in 75,000 so 1/3 is equal to 75,000 therefore one or the total capital will be equal to 75,000 into three by one giving us 2 lakh 25,000 so the total capital should be two lakh twenty five thousand one third will be given by C what about the remaining is admitted for one-third share in the profit and bring seventy five thousand capitals of a and B if nothing is mentioned they will continue to share the profits and losses between them will be the same as before so what is remaining now two-third remains two-third will be shared by a and B in the ratio 3 by 5 and 2 by 5 two-third remaining C's chef 1/3 C share is one-third remaining balance is 2/3 2/3 will be borne by a and B in the ratio 3 is to 2 so this is 3/5 into two-third giving us 2 by 5 and this is 2/5 of 2/3 that is equal to 4 by 52 by 5 and 4 by 50 so 2 by 5 I could also write it as multiplying both the numerator and the denominator by 3 because I want 15 I won the basem denominator here I multiply the numerator and the denominator by 3 I will get 6 by 15 2 by 5 is the same as 6 by 15 so what is the share now 6 by 15 and 4 by 15 6 by 15 is a scare what is the total capital we said is to like 25,000 6 by 15 of 2 lakh 25,000 will give us 15 is say cancel this would be 15 15 6 are 90 and for B it would be 4 by 15 off to luck 25,000 that would be 60,000 so the Capitals should actually be a 90,000 be 60,000 and C is already bringing in 75,000 - like this is how the tool at 25000 should be there now what is the position as of now the respective capitals are one lakh twenty thousand for a therefore 30,000 needs to be refunded to a currently it is 54 thousand for B so six thousand should be refunded to be but they have asked us only the amount to be refunded to 8a should be refunded 30,000 B should be refunded six thousand so the correct answer in this situation only the amount refunded to a is thirty thousand
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