T.S. Grewal Class 12 Chapter 5 Q.59 - Retirement of a Partner

Question 59

The Partnership Deed of Aman, Bharat and Chetan (equal partners) provides that a partner retiring on six months’ notice shall be paid: (a) the amount standing to the credit of his Capital and Current Accounts; (b) his share of profit to the date of retirement, on the average profit of the three preceding completed years, if he retires mid-year; (c) his share of goodwill, calculated at 1½ times the average profit of the three preceding completed years; (d) his share of any gain or loss on revaluation of assets and reassessment of liabilities. Chetan gave notice on 31st March, 2024 to retire with effect from 30th September, 2024. His Capital stood at ₹1,60,000 and his Current Account was ₹5,000 (Dr.). Profits for the three preceding completed years were: I – ₹45,000, II – ₹30,000, III – ₹24,000. Revaluation resulted in neither gain nor loss. What amount is due to Chetan?

Solution

Average Profit = (45,000 + 30,000 + 24,000) / 3 = ₹33,000. Chetan’s share of profit for 6 months = 33,000 × 1/3 × 6/12 = ₹5,500. Firm’s Goodwill = 33,000 × 1½ = ₹49,500; Chetan’s share = 49,500 × 1/3 = ₹16,500, borne equally by Aman and Bharat (₹8,250 each).