New profit sharing ratio is determined on admission of a partner. As a result of new partner acquiring the share from old partners, the shares of old partners are reduced. What is it known as and why is it important to determine it?
New profit sharing ratio is determined on admission of a partner. As a result of new partner acquiring the share from old partners, the shares of old partners are reduced. What is it known as and why is it important to determine it?
Anurag Pathak Changed status to publish July 18, 2023
The ratio in which the shares of the old partners are reduced is known as Sacrificing Ratio. It is important to determine the sacrificing ratio because the new partner will compensate the sacrificing partners in their sacrificing ratio by paying a premium for goodwill.
Anurag Pathak Changed status to publish July 18, 2023
