NCERT Solutions for Class 12 Accounting Chapter 4 Reconstitution Retirement Death Of A Partner

his age, his bad health, change in firm’s nature of a business, etc. In case of Partnership at Will, a partner may retire at any time. Retirement amounts to a reconstitution of a firm where the number of partners, their capital contribution ratio and also the profit-sharing ratio changes. The retiring partner is paid his share of capital, goodwill and revaluation profit or loss.

Death or insolvency of a partner also results in reconstitution of a firm when the remaining partners wish to continue the firm. In case of insolvency, all dues are paid to the insolvent partner and partnership agreement is aborted. As per the law, an insolvent is incompetent to enter into a contract or an agreement. In case of death, all dues are paid to the legal heir of the deceased partner.