What is Gaining Ratio?
Gaining ratio is computed during the death or retirement of a partner. It is the ratio in which the remaining partners obtain the going partner’s portion of profit. The ratio in which the continuing partners have obtained the portion from the dead/retiring partner is known as the gaining ratio. Usually, the continuing partners obtain the share of retiring/dead partner from their old profit sharing ratio. In that scenario, the gaining ratio of the remaining partners will be the same as their old profit sharing ratio among them and there is no need to calculate the gaining ratio.
How is Gaining Ratio Calculated?
For instance, Ajit, Dino and Gaurav are partners sharing profits in the ratio of 5:3:2. Dino retires. Ajit and Gaurav decide to share the profits of the new firm in the ratio of 3:2. The gaining ratio will be calculated as follows :
Gaining share of Continuing Partner = New share – Old share
The above mentioned is the concept that is explained in detail about Gaining Ratio for the class 12 Commerce students. To know more, stay tuned to BYJU’S.