# Retirement or Death of a Partner Notes | SwaVid Retirement or Death of a Partner, NCERT Class 12 Accountancy: notes with key ideas, formats, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-12/accountancy/chapter/reconstitution-of-a-partnership-firm-retirement-death-of-a-partner Source: https://www.swavid.com/cbse/class-12/accountancy/chapter/reconstitution-of-a-partnership-firm-retirement-death-of-a-partner # Reconstitution of a Partnership Firm - Retirement/Death of a Partner ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 12 Accountancy on SwaVid ### Ascertaining new profit sharing and gaining ratio ### Treatment of goodwill ### Revaluation of assets and reassessment of liabilities ### Adjustment of accumulated reserves and profits ### Settlement of outgoing partner's dues ### Calculation of deceased partner's interim profit ### Next chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 12 › Accountancy › Reconstitution of a Partnership Firm - Retirement/Death of a Partner Notes written by SwaVid from the NCERT textbook. Class 12 Accountancy, NCERT Accountancy Part I: partnership firms. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains the accounting treatment when a partner leaves a firm due to retirement or death. It covers recalculating profit sharing ratios, revaluing assets and liabilities, adjusting goodwill, and settling amounts due to the outgoing partner or their legal representative. Source: NCERT Accountancy Part I: partnership firms (Reprint 2026-27) , Reconstitution of a Partnership Firm - Retirement/Death of a Partner When a partner retires or dies, the remaining partners acquire the outgoing partner's share. The ratio in which the continuing partners increase their existing shares is called the gaining ratio. The retiring or deceased partner is entitled to their share of goodwill valued at the date of exit. This share is compensated by the continuing partners in their gaining ratio through capital or current accounts. Assets and liabilities are revalued on retirement or death using a Revaluation Account. The resulting net profit or loss is distributed among all partners, including the outgoing partner, in the old profit sharing ratio. Any undistributed profits, reserves, or accumulated losses appearing in the balance sheet are transferred to the capital accounts of all partners in their old profit sharing ratio. The balance in the retiring partner's capital account is either paid immediately in cash or transferred to their loan account. For a deceased partner, the total amount payable is transferred to their legal representative's or executor's account. If death occurs during an accounting year, the deceased partner's share of profit up to the date of death is estimated based on time or turnover and debited to Profit and Loss Suspense Account. Try each question first. Then tap it to see the answer. Old shares: A = 3/6, B = 2/6, C = 1/6 Share gained: A gains 2/6, C gains 0 New share of A = 3/6 + 2/6 = 5/6 New share of C = 1/6 + 0 = 1/6 New ratio is 5 : 1 and gaining ratio is 1 : 0 (A gains 2/6) Z's share of goodwill = ₹ 60,000 × 1/5 = ₹ 12,000 Old shares: X = 2/5, Y = 2/5; New shares: X = 1/2, Y = 1/2 Gain of X = 1/2 - 2/5 = 1/10; Gain of Y = 1/2 - 2/5 = 1/10 Gaining ratio between X and Y = 1 : 1 Debit to X's Capital A/c = ₹ 12,000 × 1/2 = ₹ 6,000 Debit to Y's Capital A/c = ₹ 12,000 × 1/2 = ₹ 6,000 Entry: X's Capital A/c Dr ₹ 6,000 / Y's Capital A/c Dr ₹ 6,000 / To Z's Capital A/c ₹ 12,000 X's Capital A/c Dr ₹ 6,000, Y's Capital A/c Dr ₹ 6,000, To Z's Capital A/c ₹ 12,000 Time from 1 April to 30 June = 3 months Estimated profit for 3 months = ₹ 1,20,000 × (3 / 12) = ₹ 30,000 P's share in profit = 2/5 P's interim profit = ₹ 30,000 × (2 / 5) = ₹ 12,000 ₹ 12,000 Dissolution of Partnership Firm . Accounting for Partnership: Basic Concepts . Reconstitution of a Partnership Firm - Admission of a Partner . The 10 chapters of Class 12 Accountancy . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Dissolution of Partnership Firm. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - NCERT NCERT book, Class 12 - 80 marks, theory paper - 3 quick checks - Using the new ratio instead of the gaining ratio to adjust goodwill . Always compensate the outgoing partner's share of goodwill by debiting continuing partners' capital accounts in their gaining ratio, not the new profit sharing ratio. - Excluding the retiring or deceased partner from revaluation profit or loss . Revaluation occurs before the partner exits, so divide the revaluation gain or loss among all partners in their old profit sharing ratio. - Paying the deceased partner directly instead of crediting the executor . Transfer the entire balance of the deceased partner's capital account to the Deceased Partner's Executor's Account, as payment cannot be made directly to a deceased individual. - Calculating the deceased partner's interim profit for the entire year . Apportion the estimated yearly profit for the exact number of months or days from the beginning of the financial year up to the date of death. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 12](https://www.swavid.com/cbse/class-12) - [Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup) - [All 10 chapters](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [NCERT Accountancy Part I: partnership firms (Reprint 2026-27)](https://ncert.nic.in/textbook.php?leac1=0-4) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/dissolution-of-partnership-firm) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/accounting-for-partnership-basic-concepts) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/reconstitution-of-a-partnership-firm-admission-of-a-partner) - [Class 12 Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup)