When a novice partner is added or when a current partner leaves or retires from the partnership, dissolution of partnership is said to come into the picture. Regardless of the change in the partners’ configuration and composition, remaining partners determine to continue the business concern. To put in other words, since there is a change in the partners, the partnership that prevailed among the partners prior to the change, is said to be dissolved. In case of the old partnership, new partnership is composed.The association between partners is amended. However, this point is worth noting here is that, the new enterprise takes the liabilities and assets of the old enterprise. Dissolution of partnership does not add to any discontinuation in the business concern. This, a few times, is known as a technical dissolution.
The partnership may dissolve in any of the below mentioned ways :
- Change in current profit sharing ratio (PSR) among partners
- Admission of a partner
- Death of a partner
- Retirement of a partner
- Completion of the deal, if partnership is established for that
- Bankruptcy of a partner
- Expiry of the partnership period, if partnership is for a particular time frame
The above mentioned is the concept that is explained in detail about Dissolution of Partnership for the class 12 Commerce students. To know more, stay tuned to BYJU’S.