Retirement or Death of a Partner Q&A

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

1. Describe the procedure to be followed at the time of a partner’s retirement.

2. What types of matters need to be decided when a partner retires?

3. How is the amount due to the retiring partner calculated?

4. What journal entry for the transfer of general reserves should be passed at the time of a partner’s retirement?

5. What is the gaining ratio?

6. How is the gaining ratio calculated?

7. What is the surrender value?

8. On the retirement of a partner, how is the value of goodwill determined?

9. At the time of retirement, who pays the bonus?

10. When is the goodwill method used to determine value of goodwill?

Frequently Asked Questions

What is a Partnership retirement in accounting?

A Partnership retirement in accounting is a retirement plan that allows self-employed individuals and Partnerships to save for retirement. The plan allows participants to make tax-deductible contributions and receive tax-deferred growth on their investments. The plans are also known as Individual 401(k)s, Solo 401(k)s, and Unincorporated Business 401(k)s.

Can I contribute to a Partnership retirement plan if I am not self-employed?

Self-employed individuals and Partnerships are eligible to participate in a Partnership retirement plan. Employees of the self-employed individual or Partnership are not eligible to participate.

Can I contribute to a Partnership retirement plan if I am not self-employed?

Can I contribute to a Partnership retirement plan if I am not self-employed?

What are the benefits of a Partnership retirement plan?

The benefits of a Partnership retirement plan include tax-deductible contributions, tax-deferred growth on investments, and the ability to save for retirement.

Can I take my money out of a Partnership retirement plan before I retire?

Yes, you can take your money out of a Partnership retirement plan before you retire, but you will likely be subject to taxes and penalties. It is important to consult with a tax professional before taking money out of a retirement plan.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

4 thoughts on "Retirement or Death of a Partner Q&A"

  1. Hello,
    please could you send me any sources which help me to teach any model in accounting, or any eBooks which help me in my field. I really appreciate that.
    Kind Regards,
    Hadi

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