{"id":1377,"date":"2019-06-21T12:41:13","date_gmt":"2019-06-21T12:41:13","guid":{"rendered":"https:\/\/commerceiets.com\/?p=1377"},"modified":"2019-06-21T12:41:13","modified_gmt":"2019-06-21T12:41:13","slug":"sacrificing-ratio","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/sacrificing-ratio\/","title":{"rendered":"SACRIFICING RATIO"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/#MEANING\" title=\"MEANING\">MEANING<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/#WHY_SACRIFICING_RATIO_IS_CALCULATED\" title=\"WHY SACRIFICING RATIO IS CALCULATED?\">WHY SACRIFICING RATIO IS CALCULATED?<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/#FORMULA\" title=\"FORMULA\">FORMULA<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/#HOW_IS_SACRIFICING_RATIO_CALCULATED\" title=\"HOW IS SACRIFICING RATIO CALCULATED?\">HOW IS SACRIFICING RATIO CALCULATED?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/#DIFFERENCE_BETWEEN_SACRIFICING_RATIO_AND_NEW_RATIO\" title=\"DIFFERENCE BETWEEN SACRIFICING RATIO AND NEW RATIO\">DIFFERENCE BETWEEN SACRIFICING RATIO AND NEW RATIO<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MEANING\"><\/span>MEANING<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Sacrificing Ratio is the ratio in which old or existing partners forego, i.e., sacrifice their share of profit in favor of the new or incoming partner. This share may be given or sacrificed to the new or incoming partner by all the old partners equally or by all or some of the partners in agreed ratio.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"WHY_SACRIFICING_RATIO_IS_CALCULATED\"><\/span>WHY SACRIFICING RATIO IS CALCULATED?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The purpose of calculating the sacrificing ratio is to determine the amount of compensation which the new partners should pay to the old partners for the share of profit sacrificed by them. The compensation is usually paid in the terms of Goodwill.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FORMULA\"><\/span>FORMULA<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-background has-pale-cyan-blue-background-color\"><strong>SACRIFICING RATIO= OLD SHARE- NEW SHARE<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"HOW_IS_SACRIFICING_RATIO_CALCULATED\"><\/span>HOW IS SACRIFICING RATIO CALCULATED?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is calculated differently in three different situations. These are as follows:<\/p>\n\n\n\n<p><strong>SITUATION 1: <\/strong>When share of new or incoming partner is given without giving the details of sacrifice made by old or existing partners.<\/p>\n\n\n\n<p>In this situation, it is assumed that the old partners\nforego their share in old profit sharing ratio. Therefore, sacrificing ratio is\nalways the old profit sharing ratio. Thus the effect will be that there will be\nno change in the profit sharing ratio of the old partners.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>EXAMPLE: <\/strong>A and B are partners sharing profits in the ratio of 3:1. C is admitted into partnership for 1\/8<sup>th<\/sup> share of profits. Calculate sacrificing ratio.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>SOLUTION:<\/strong> Since C\u2019s share is given without mentioning as to what C acquires from A and B separately, C acquires his share from A and B in their old profit sharing ratio. Therefore, the sacrifice made by A and B is in the ratio of 3:1.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">A\u2019s sacrifice = 1\/8 * 3\/4= 3\/32<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">B\u2019s sacrifice = 1\/8 * 1\/4= 1\/32<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">So, Sacrificing ratio is similar to Old\nratio, i.e. 3:1<\/p>\n\n\n\n<p><strong>SITUATION 2: <\/strong>When old ratio of old partners and new ratio of all the partners is given.<\/p>\n\n\n\n<p>In this situation, sacrifice of share of\neach sacrificing partner is calculated by deducting the new share from old\nshare.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>EXAMPLE:<\/strong> A and B are partners sharing profits I n the ratio of 3:2. C is admitted into partnership. New profit sharing among A, B and C is 5:3:2. Find sacrificing ratio.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>SOLUTION:<\/strong> Sacrificing Ratio = Old share- New share<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">A\u2019s Sacrifice= 3\/5-5\/10=1\/10<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">B\u2019s sacrifice= 2\/5-3\/10=1\/10<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">Hence, sacrificing ratio of A and B= 1:1<\/p>\n\n\n\n<p><strong>SITUATION 3: <\/strong>When new or incoming partner acquires the share by surrender of a particular fraction of shares by old partners.<\/p>\n\n\n\n<p>In this situation, share surrendered by each\nold partner is deducted from his old share to determine his share in the\nreconstituted firm. The shares surrendered by the old partners in favour of new\nor incoming partner are added. It is the share of the new partner.<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>EXAMPLE:<\/strong> A and B are partners in a firm sharing profits and losses in the ratio of 5:3. A surrenders 1\/20<sup>th<\/sup> of his share, whereas B surrenders 1\/24<sup>th<\/sup> of his share in favour of C, a new partner. Calculate sacrifice of partners. <\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\"><strong>SOLUTION: <\/strong>A\u2019s Sacrifice= &nbsp;5\/8*1\/20= 1\/32 or 2\/64<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">B\u2019s Sacrifice= 3\/8 * 1\/24= 3\/64<\/p>\n\n\n\n<p class=\"has-background has-very-light-gray-background-color\">So, the sacrifice is 2:1<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIFFERENCE_BETWEEN_SACRIFICING_RATIO_AND_NEW_RATIO\"><\/span>DIFFERENCE BETWEEN SACRIFICING RATIO AND NEW RATIO<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"wp-block-table has-subtle-pale-blue-background-color has-background\"><tbody><tr><td>   <strong>BASIS OF DIFFERENCE&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;    <\/td><td>  <strong> SACRIFICING RATIO   <\/strong><\/td><td>   <strong>NEW RATIO   <\/strong><\/td><\/tr><tr><td>   <strong>MEANING   <\/strong><\/td><td>\n  It is the ratio in which old partners agree to sacrifice their shares\n  of profits in the favor of a new partner.\n  <\/td><td>\n  It is the ratio in which all partners including the incoming partner\n  share the future profits and losses.\n  <\/td><\/tr><tr><td>  <strong> RELATED PARTNERS   <\/strong><\/td><td>\n  It is related to the old partners only.\n  <\/td><td>\n  It is related to al the partners including new partner.\n  <\/td><\/tr><tr><td>  <strong> CALCULATION <\/strong>  <\/td><td>\n  Old Ratio- New Ratio\n  <\/td><td>\n  Old Ratio-Sacrificing Ratio\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p>\n\n\n\n\n\n\u0001<\/p>\n","protected":false},"excerpt":{"rendered":"<p>MEANING Sacrificing Ratio is the ratio in which old or existing partners forego, i.e., sacrifice their share of profit in favor of the new or incoming partner. This share may be given or sacrificed to the new or incoming partner by all the old partners equally or by all or some of the partners in&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/sacrificing-ratio\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;SACRIFICING RATIO&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":1379,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,21],"tags":[43,44,45],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1377"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=1377"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1377\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/1379"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=1377"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=1377"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=1377"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}