Distinction between Sacrificing Ratio and Gaining Ratio
Sacrificing Ratio and Gaining Ratio can be distinguished as follows:
|
Basis of |
Sacrificing Ratio |
Gaining Ratio |
| 1. Meaning | It is the ratio in which the old partners have agreed to sacrifice their shares in profit in favour of new partner. | It is the ratio in which the continuing partners acquire the outgoing partner’s share. |
| 2. Purpose | It is calculated to determine the amount of compensation to be paid by the incoming partner to the sacrificing partners. | It is calculated to determine the amount of compensation to be paid by each of the continuing partners to the outgoing partner. |
| 3. Calculation | It is calculated by taking out the difference between old ratio and new ratio. | It is calculated by taking out the difference between new ratio and old ratio. |
| 4. Time | It is calculated at the time of admission of a new partner. | It is calculated at the time of retirement of a partner. |
The following are the different situations while calculating the new profit sharing ratio and the gaining ratio.
1. Nothing is mentioned about the new ratio
2. Unequal gain
3. Equal gain
4. Entire gain by one partner
5. New profit sharing ratio is given