When there is a change in the profit and loss sharing ratio of exiting partners, a protion of profit of certain partners is reduced, which is known as sacrifice of profit and the partners share of profit increase which is known as gain of profit. Where,
- Sacrifice of partner in profit = Old ratio of profit – New ratio of profit
- Gain of partner in profit = New ratio of profit – Old ratio of profit
At the time of calculation of sacrifice, if the answer is negative then it will be considered as a gain of concern partner and same as at the time of calculation of gain, if the answer is negative then it will be considered as a sacrifice of concern partner.
