Partnership - Some typical points

DISSOLUTION OF A FIRM

1. Piecemeal Distribution- In Maximum Loss Method, whereas the maximum loss will be shared in PSR (Profit Sharing Ratio) in normal circumstances but if one (or more) partner becomes insolvent then his deficiency will be shared in Capital Contribution Ratio and not in PSR as per Garner Vs. Murray Rules

2. Garner Vs. Murray Rule -  (The third partner Mr. Wilikins became insolvent.
    a. The loss of realisation shall be shared between all the partners (including the insolvent partner) in their PSR (profit sharing ratio).
     b.  The solvent partner shall bring in cash equal to the amount of loss suffered by them.
As per Indian Partnership Act, the solvent partner shall not bring in cash, their share ofloss on realisation. 
      c. The deficiency of insolvent partner shall be taken over by the solvent partners in their Capital Contribution Ratio (fixed or fluctuating capital).