It is necessary to determine the new profit sharing ratio at the time of admission of a partner because the new partner is entitled to share the future profits of the firm.

**New
profit sharing ratio and sacrificing ratio**

It is necessary to
determine the new profit sharing ratio at the time of admission of a partner
because the new partner is entitled to share the future profits of the firm.
New profit sharing ratio is the agreed proportion in which future profit will
be distributed to all the partners including the new partner. If the new profit
sharing ratio is not agreed, the partners will share the profits and losses
equally.

The old partners may
sacrifice a portion of the share of profit to the new partner. The sacrifice
may be made by all the partners or some of the partners. Sacrificing ratio is
the proportion of the profit which is sacrificed or foregone by the old
partners in favour of the new partner. The purpose of finding the sacrificing
ratio is to share the goodwill brought in by the new partner. The share
sacrificed is calculated by deducting the new share from the old share.

Share sacrificed = Old
share - New share

Sacrificing ratio =
Ratio of share sacrificed by the old partners

Share of the new partner
is the sum of shares sacrificed by the old partners.

**Tutorial note: **When the new profit
sharing ratio is not given in the problem, it is to be** **calculated based on the
information given in the problem.

When new profit sharing ratio is given, sacrificing
ratio has to be calculated as follows:

Sacrificing ratio = Ratio of share sacrificed by
the old partners

Share
sacrificed = Old share - New share

**Illustration 8**

Anbu and Raju are
partners, sharing profits in the ratio of 3:2. Akshai is admitted as a partner.
The new profit sharing ratio among Anbu, Raju and Akshai is 5:3:2. Find out the
sacrificing ratio.

**Solution**

When new profit sharing
ratio is not given, but the share sacrificed by the old partner(s) is given,
new profit sharing ratio is calculated as follows:

**Illustration 9**

Hari and Saleem are
partners sharing profits and losses in the ratio of 5:3. They admit Joel for
1/8 share, which he acquires entirely from Hari. Find out the new profit
sharing ratio and sacrificing ratio.

**Solution**

Computation of
sacrificing ratio and new profit sharing ratio

Share sacrificed by old
partners

**Illustration 10**

Ravi and Kumar share
profits and losses in the ratio of 7:3. Christy is admitted as a new partner
with 3/7 share which he acquires 2/7 from Ravi and 1/7 from Kumar. Calculate
the new profit sharing ratio and sacrificing ratio.

**Solution**

Computation of sacrificing ratio and
new profit sharing ratio

**Illustration 11**

Hameed and Govind are
partners sharing profits and losses in the ratio of 5:3. They admit John as a
partner. John acquires his share 1/5 from Hameed and 1/5 from Govind. Find out
the new profit sharing ratio and sacrificing ratio.

**Solution**

Computation of
sacrificing ratio and new profit sharing ratio

When new profit sharing
ratio is not given, but the share sacrificed is given as a proportion on old
partners’ share, new profit sharing ratio is calculated as follows:

*Share sacrificed by old partner = Old share x Proportion of share
sacrificed*

*New share of old partner = Old share - Share sacrificed*

*Share of new partner = Sum of shares sacrificed by old partners*

**Illustration 12**

Suresh and Dinesh are
partners sharing profits in the ratio of 3:2. They admit Ramesh as a new
partner. Suresh surrenders 1/5 of his share in favour of Ramesh. Dinesh
surrenders 2/5 of his share in favour of Ramesh. Calculate the new profit
sharing ratio and sacrificing ratio.

**Solution**

Computation of
sacrificing ratio and new profit sharing ratio

**Illustration 13**

Prasanth and Nisha are
partners sharing profits and losses in the ratio of 3:2. They admit Ramya as a
new partner. Prasanth surrenders 2/5 of his share and Nisha surrenders 2/5 of
her share in favour of Ramya. Calculate the new profit sharing ratio and
sacrificing ratio.

**Solution**

**Computation of sacrificing ratio and new profit sharing ratio**

When new profit sharing
ratio is not given, but the proportion of share sacrificed on new partner’s
share is given, new profit sharing ratio is calculated as follows:

New share of old
partner = Old share - Share sacrificed

Share sacrificed = New partner’s share × Proportion of share sacrificed

**Illustration 14**

Ramesh and Raju are
partners sharing profits in the ratio of 2:1. They admit Ranjan into
partnership with 1/4 share of profit. Ranjan acquired the share from old
partners in the ratio of 3:2. Calculate the new profit sharing ratio and
sacrificing ratio.

**Solution**

**Computation of sacrificing ratio and new profit sharing ratio**

**Illustration 15**

Mahesh and Dhanush are
partners sharing profits and losses in the ratio of 2:1. Arun is admitted for
1/4 share which he acquired equally from both Mahesh and Dhanush. Calculate the
new profit sharing ratio and sacrificing ratio.

**Solution**

**Computation of sacrificing ratio and new profit sharing ratio**

When new profit sharing
ratio, share sacrificed and the proportion of share sacrificed is not given,
but only the share of new partner is given, new profit sharing ratio is
calculated by assuming that the share sacrificed is the proportion of old
share. New profit sharing ratio is calculated as follows:

Share sacrificed = New
partner’s share x Old share

New share of old partner = Old share - Share sacrificed

**Illustration 16**

Vimal and Athi are
partners sharing profits in the ratio of 2:1. Jeyam is admitted for 1/4 share
in the profits. Calculate the new profit sharing ratio and sacrificing ratio.

**Solution**

**Computation of sacrificing
ratio and new profit sharing ratio**

Since share sacrificed,
proportion of share sacrificed and new profit sharing ratio are not given, it
is assumed that the existing partners sacrifice in their old profit sharing
ratio, that is, 2:1.

Sacrificing ratio of
Vimal and Athi is 2:1

Let the total share be 1

**Illustration 17**

Anil, Sunil and Hari are
partners in a firm sharing profits in the ratio of 4:3:3. They admit Raja for
20% profit. Calculate the new profit sharing ratio and sacrificing ratio.

**Solution**

**Computation of sacrificing ratio and new profit sharing ratio**

Tags : Admission of a Partner | Accountancy , 12th Accountancy : Chapter 5 : Admission of a Partner

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12th Accountancy : Chapter 5 : Admission of a Partner : New profit sharing ratio and sacrificing ratio | Admission of a Partner | Accountancy

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