On the retirement or death of a partner, the remaining partners who gain due to the change in profit-sharing ratio must compensate:
- ANo partner
- BThe retiring partner only
- CThe remaining partners only (who have sacrificed)
- DThe remaining partners (who have sacrificed) as well as the retiring partner
Solution & Step-by-step Explanation
When the profit-sharing ratio changes due to retirement or death, any partner whose profit share decreases is a sacrificing partner. The remaining partners who gain must compensate all sacrificing partners—which includes the retiring/deceased partner as well as any continuing partner whose share has decreased—in proportion to their respective sacrifices.