{"id":52885,"date":"2024-04-15T23:45:53","date_gmt":"2024-04-15T23:45:53","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=52885"},"modified":"2024-04-15T23:45:53","modified_gmt":"2024-04-15T23:45:53","slug":"when-capitals-of-partners-are-fluctuating-then-in-the-case-of-dissolution-of-the-firm-the-deficiency-of-the-insolvent-partners-capital-is-borne-by-the-solvent-partners-according-to-garner-vs-murr","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/when-capitals-of-partners-are-fluctuating-then-in-the-case-of-dissolution-of-the-firm-the-deficiency-of-the-insolvent-partners-capital-is-borne-by-the-solvent-partners-according-to-garner-vs-murr\/","title":{"rendered":"When capitals of partners are fluctuating, then in the case of dissolution of the firm, the deficiency of the insolvent partner&#8217;s capital is borne by the solvent partners according to Garner Vs. Murrary decision:"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a97d67c5a3b9\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    In their profit-sharing ratio                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    In the ratio of their capitals as they stood before the commencement of dissolution                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    In the ratio of their capitals arrived at after the adjustment of accumulated profit &amp; loss on realisation but before profit and loss on realisation                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    In the ratio of their capital arrived at after the adjustment of accumulated profit &amp; loss and profit &amp; loss on realisation                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>C. In the ratio of their capitals arrived at after the adjustment of accumulated profit &amp; loss on realisation but before profit and loss on realisation<\/strong><\/p>\n<p>The Garner v Murray decision is a landmark case in English law that established the principle that, in the case of dissolution of a partnership, the deficiency of the insolvent partner&#8217;s capital is borne by the solvent partners in the ratio of their capitals arrived at after the adjustment of accumulated profit &amp; loss on realisation but before profit and loss on realisation.<\/p>\n<p>This means that the solvent partners are only liable to contribute to the extent of their capitals, after taking into account any profits or losses that have been realised up to the point of dissolution. This is in contrast to the previous law, which held that the solvent partners were liable to contribute to the full extent of the insolvent partner&#8217;s deficiency.<\/p>\n<p>The Garner v Murray decision has been widely adopted in other common law jurisdictions, and it is considered to be a fair and equitable way of apportioning the losses of a dissolved partnership.<\/p>\n<p>Here is a brief explanation of each option:<\/p>\n<ul>\n<li>Option A: In their profit-sharing ratio. This option is incorrect because the solvent partners are not liable to contribute to the full extent of the insolvent partner&#8217;s deficiency. They are only liable to contribute to the extent of their capitals, after taking into account any profits or losses that have been realised up to the point of dissolution.<\/li>\n<li>Option B: In the ratio of their capitals as they stood before the commencement of dissolution. This option is incorrect because the capitals of the partners <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> may have changed since the commencement of dissolution. The solvent partners are only liable to contribute to the extent <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> of their capitals as they stood at the point of dissolution.<\/li>\n<li>Option C: In the ratio of their capitals arrived at after the adjustment of accumulated profit &amp; loss on realisation but before profit and loss on realisation. This option is correct because it is the ratio in which the solvent partners are liable to contribute to the deficiency of the insolvent partner&#8217;s capital.<\/li>\n<li>Option D: In the ratio of their capitals arrived at after the adjustment of accumulated profit &amp; loss and profit &amp; loss on realisation. This option is incorrect because the solvent partners are only liable to contribute to the extent of their capitals, after taking into account any profits or losses that have been realised up to the point of dissolution. The profit and loss on realisation is not taken into account when calculating the solvent partners&#8217; liability.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>When capitals of partners are fluctuating, then in the case of dissolution of the firm, the deficiency of the insolvent partner&#039;s capital is borne by the solvent partners according to Garner Vs. 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