Partners P, Q, and R share profits in the ratio 4:3:3. The firm's net assets before R’s retirement are Rs. 6,40,000 and goodwill is Rs. 1,00,000. After R retires, the assets are revalued: the building increases by Rs. 20,000 and the stock decreases by Rs. 8,000. The goodwill is written off in the sacrificing ratio of P and Q which is 4:1. Calculate the amount that should be paid to retiring partner R.

Step-by-step solution

1. Add the revaluation change: building +20,000, stock –8,000, net +12,000. New net assets = 6,40,000+12,000=6,52,000.
2. Since goodwill is written off, R receives no goodwill. He receives his share of the revalued net assets. R’s share ratio is 3 parts out of total 10 parts.
3. Compute R’s payment: $\frac{3}{10}\times 6,52,000=1,95,600$.

Concept tested: Retirement payment calculation

Published 26 September 2026 · How this solution was prepared and checked