New Profit Sharing Ratio Class 12

New profit sharing ratio is the ratio of profits amongst the partners, which arise when there is a  change in the existing profits proportion of the partners. Either there is a change in gaining ratio or change in sacrificing ratio of the partners. It is not necessary that a new profit ratio arises only in the case of admission or retirement of partner . It can also arise   in the case of change in profit sharing ratio among the partners by mutual consent or in terms of the pre-existing agreement.

The Key features of the new profit  ratio are as under : –

  • It is related to all the partners including new partner.
  •  New profit  ratio =  Old Ratio – Sacrificing Ratio




New Profit sharing ratio Formulae :

  • When new partner’s share is given : –  Old ratio of concerned partner × Remaining share of old partners out of total share
  • When new partner acquires/takes/purchases his share from old partners: Old ratio – Sacrificing ratio of old partners
  • When old partners give/surrender a part of their share in favour of new partner –  Old ratio – Surrender value of old partners

This Video computes the new profit sharing ratio amongst the partners when only profit of new partner  is given

New Profit Sharing Ratio – Example 1

A , D and K are partners sharing losses / otherwise in the ratio of 3 , 9 and 1 respectively. K acquires 2/3 share from D . What will be the New profit ratio among partners will be:

Explanation : –




New Profit Sharing Ratio – Example 2

A , D and K are partners sharing profits and losses in the ratio of 5 : 5 : 2 respectively. A sacrifices 1/4 of his share  and D sacrifices 1/4 of his share in favour of K . What will be the sacrificing ratio between partners.

Explanation : –

= 15 : 15 : 18

Sacrificing ratio = Old ratio – New ratio

A =5/12 – 15/48

= (20-15)/48

= 5/48

D = 5/12 – 15/48

= (20-15)/48

= 5/48

5 : 5

New Profit Sharing Ratio – Example 3

F , G and H are partners sharing profits and losses in the ratio of 1 : 3 : 3 H retired from the firm and
surrendered 1/3rd of his share of prot to F and remaining in favour of G . Calculate the new profit sharing ratio of F
and G .




Explanation : –

Old ratio between F , G and H = 1 : 3 : 3

Share surrendered by H in favour of F = (3/7) x (1/3) = 3/21

Share surrendered by H in favour of G = (3/7) – (3/21)

= (9-3)/21

= 6/21

New share of F = (1/7) + (3/21)

= (3+3)/21

= 6/21

New share of G = (3/7) + (6/21)

= (9+6)/21

= 15/21

New ratio = 6/21 : 15/21

= 6 : 15

New Profit Sharing Ratio – Example 4

G , H and I are partners sharing profit and losses in the ratio of 3 : 2 : 1. I retired from the firm and
surrendered 1/4th of his share of prot to G and remaining in favour of H . Calculate the new profit sharing ratio of G and H .

Explanation : –

Old ratio between G , H and I = 3 : 2 : 1

Share surrendered by I in favour of G = (1/6) x (1/4) = 1/24

Share surrendered by I in favour of H = (1/6) – (1/24)

= (4-1)/24

= 3/24

New share of G = (3/6) + (1/24)

= (12 + 1)/24

= 13/24

New share of H = (2/6) + (3/24)

= (8+3)/24

= 11/24

New Ratio = 13/24 : 11/24

= 13 : 11




New Profit Sharing Ratio – Example 5

D , E and F are partners sharing profits and losses in the ratio of 1/8 : 3/8 : 4/8 F died and 1/2 of his share is taken over by D and remaining by E . Calculate the new profit sharing ratio between D and E .

Explanation : –

Old ratio between D E and F = 1 : 3 : 4

Share of F taken over by D = (4/8) x (1/2) = 4/16

Share of F taken over by E =(4/8) – (4/16)

= (8-4)/16

= 4/16

New share of D = (1/8) + (4/16)

= (2+4)/16

= 6/16

New share of E = (3/8) + (4/16)

= (6+4)/16

= 10/16

New ratio = 6/16 : 10/16

= 6 : 10

Gaining ratio = The ratio in which the continuing partners acquire the outgoing (deceased ) partner share
New share – Old share

Gaining ratio between D and E = 4/16 : 4/16

= 4:4




Chapter 3 Reconstitution of a Partnership Firm – Admission of a Partner

  1. Modes of Reconstitution of a Partnership Firm
  2. Admission of a New Partner
  3. New Profit Sharing Ratio
  4. Sacrificing Ratio
  5. Goodwill
  6. Adjustment for Accumulated Profits and Losses and Capitals
  7. Revaluation of Assets and Reassessment of Liabilities
  8. Change in Profit Sharing Ratio among the Existing Partners
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