What is Retirement of a Partner?
A partner may ascertain to either withdraw or retire from the enterprise due to certain reasons such as his bad health, his age, change in enterprise’s nature of a business, etc., In the Partnership at Will, a partner might retire at any time. Retirement leads to a reconstitution of an enterprise where the partners’ contribution ratio and the profit sharing ratio change. The retiring partner is given his share of capital, revaluation profit or loss and goodwill.
Let us now understand each concept of Reconstitution of a Partnership Firm –Retirement/Death of a Partner in detail:
- Ascertaining the Amount Due to Retiring/Deceased Partner
- Gaining Ratio
- Treatment of Goodwill
- Adjustment for Revaluation of Assets and Liabilities
- Adjustment of Accumulated Profits and Losses
- Disposal of Amount Due to Retiring Partner
- Adjustment of Partner’s Capital
- Death of a Partner
The above mentioned is the concept that is explained in detail about the Reconstitution of a Partnership Firm – Retirement/Death of a Partner for the Class 12 Commerce students. To know more, stay tuned to BYJU’S.