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Sharan and Angad are partners in a firm sharing profits and losses in the ratio of 3:2. On 1st April, 2022, they admit Akhil as a partner for 1/5 share in the profits. Akhil acquires ¹/5 of his share from Sharan and the balance from Angad. On the date of Akhil's admission, the goodwill of the firm was valued at 90,000. Akhil contributed the following assets towards his capital and his share of goodwill. Cash 60000 Debtors (less provision for doubtful debts) 20000 Land and Building 100000 Plant and Machinery 80000 You are required to:

(i) Calculate the sacrificing ratio of the partners.

User L H
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Final answer:

The sacrificing ratio for Sharan and Angad is 3:2, which is determined based on the share each partner gives up to accommodate the new partner's Akhil's profit share.

Step-by-step explanation:

The sacrificing ratio for partners is determined when a new partner is admitted into the partnership, as it represents the ratio in which the existing partners agree to give up a portion of their profit share in favor of the new partner. In the given scenario, Sharan and Angad share profits and losses in the ratio of 3:2, and Akhil is admitted for a 1/5 share in the profits. Akhil acquires 1/5 of his share from Sharan and the remaining from Angad.

To calculate the sacrificing ratio, we first need to determine the share of profits relinquished by each of Sharan and Angad. If Akhil takes 1/5 from Sharan, Sharan sacrifices 3/5 of Akhil's share (which is 1/5 of the total), equating to 3/5 * 1/5 = 3/25. Angad then sacrifices the remaining share which is 2/5 of Akhil's share, equating to 2/5 * 1/5 = 2/25. Hence, the sacrificing ratio between Sharan and Angad is 3/25 to 2/25, which simplifies to 3:2.

It is also important to note that Akhil's contribution towards his capital and goodwill amounts to the value of the assets he has brought into the firm, including Cash, Debtors, Land and Building, and Plant and Machinery.

User Crsierra
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