PPT - Reconstitution of a Partnership Firm : Retirement/Death of a Partner | Accountancy Class 12 - Commerce PDF Download

 Page 1


RETIREMENT OF A PARTNER
MEANING: 
When one or more partners leaves the firm and 
the remaining partners continue to do the 
business of the firm, it is known as retirement of a 
partner. 
Due to some reasons like old age, poor 
health, strained relations etc., an existing partner 
may decide to retire from the partnership. 
Page 2


RETIREMENT OF A PARTNER
MEANING: 
When one or more partners leaves the firm and 
the remaining partners continue to do the 
business of the firm, it is known as retirement of a 
partner. 
Due to some reasons like old age, poor 
health, strained relations etc., an existing partner 
may decide to retire from the partnership. 
RETIREMENT OF A PARTNER
A partner retires either :
(i) with the consent of all partners, or
(ii) as per terms of the agreement; or
(iii) at his or her own will.
Page 3


RETIREMENT OF A PARTNER
MEANING: 
When one or more partners leaves the firm and 
the remaining partners continue to do the 
business of the firm, it is known as retirement of a 
partner. 
Due to some reasons like old age, poor 
health, strained relations etc., an existing partner 
may decide to retire from the partnership. 
RETIREMENT OF A PARTNER
A partner retires either :
(i) with the consent of all partners, or
(ii) as per terms of the agreement; or
(iii) at his or her own will.
RETIREMENT OF A PARTNER
Due to retirement, the existing 
partnership comes to an end and the 
remaining partners form a new 
agreement and the partnership firm is 
reconstituted with new terms and 
conditions. At the time of retirement the 
retiring partner’s claim is settled.
Page 4


RETIREMENT OF A PARTNER
MEANING: 
When one or more partners leaves the firm and 
the remaining partners continue to do the 
business of the firm, it is known as retirement of a 
partner. 
Due to some reasons like old age, poor 
health, strained relations etc., an existing partner 
may decide to retire from the partnership. 
RETIREMENT OF A PARTNER
A partner retires either :
(i) with the consent of all partners, or
(ii) as per terms of the agreement; or
(iii) at his or her own will.
RETIREMENT OF A PARTNER
Due to retirement, the existing 
partnership comes to an end and the 
remaining partners form a new 
agreement and the partnership firm is 
reconstituted with new terms and 
conditions. At the time of retirement the 
retiring partner’s claim is settled.
RETIREMENT OF A PARTNER
The terms and conditions of 
retirement of a partner are normally 
provided in the partnership deed. If 
not, they are agreed upon by the 
partners at the time of retirement.
Page 5


RETIREMENT OF A PARTNER
MEANING: 
When one or more partners leaves the firm and 
the remaining partners continue to do the 
business of the firm, it is known as retirement of a 
partner. 
Due to some reasons like old age, poor 
health, strained relations etc., an existing partner 
may decide to retire from the partnership. 
RETIREMENT OF A PARTNER
A partner retires either :
(i) with the consent of all partners, or
(ii) as per terms of the agreement; or
(iii) at his or her own will.
RETIREMENT OF A PARTNER
Due to retirement, the existing 
partnership comes to an end and the 
remaining partners form a new 
agreement and the partnership firm is 
reconstituted with new terms and 
conditions. At the time of retirement the 
retiring partner’s claim is settled.
RETIREMENT OF A PARTNER
The terms and conditions of 
retirement of a partner are normally 
provided in the partnership deed. If 
not, they are agreed upon by the 
partners at the time of retirement.
Adjustments to be made
(a) New profit sharing ratio and gaining ratio.
(b) Goodwill
(c) Revaluation  of Assets and liabilities
(d) Transfer of accumulated reserve 
(e) Transfer of undistributed profit or loss
(f) Settlement of retiring partners dues
(g) New capital of the continuing partners.