VIDYA BHARTI EDUCATIONAL INSTITUTIONS

RETIREMENT OR DEATH OF A PARTNER

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RETIREMENT OF A PARTNER

MEANINGWhen one or more partners leaves the firm and the remaining partners continue to do the business of the firm, it is known as retirement of a partner. Due to some reasons like old age, poor health, strained relations etc., an existing partner may decide to retire from the partnership.

REASONS FOR RETIREMENT OF A

PARTNER

A partner retires either :(i) with the consent of all partners, or(ii) as per terms of the agreement; or(iii) at his or her own will.

ADJUSTMENTS TO BE MADE

(a) New profit sharing ratio and gaining ratio.(b) Goodwill(c) Revaluation of Assets and liabilities(d) Transfer of accumulated reserve (e) Transfer of undistributed profit or loss(f) Settlement of retiring partners dues(g) New capital of the continuing partners.

DEATH OF A PARTNERIn case of death of a partner the following things should be

calculated to know the amount due deceased partner’s executor

1. Amount of credit balance of deceased partner.2. Amount of drawings 3. Interest on Capital4. Interest on Drawings

5. Share of Profit

6. Share of general reserve 7. Share of Profit /Loss of Revaluation a/c8. Share of Goodwill &J.L.P.

Calculated till partner’s date of death.

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