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Goodwill

On the insolv...

Question

On the insolvency of one or more partners of a firm, the loss is borne by:

A

the creditors

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B

remaining solvent partners in their capital ratio

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C

all partners in their profit-sharing ratio

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D

all partners in their capital ratio

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Solution

The correct option is B remaining solvent partners in their capital ratio
Insolvency of partnership implies insolvency of one or more partners of firm(since partnership and partners are same from the legal point of view). Loss arising out of the insolvency of one or more partners shall be borne by remaining solvent partners in their capital ratio.

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