What are the different ways in which a partner can retire from the firm.
A partner can retire from the firm in the following ways:
1. As per Partnership Deed: The outgoing partner's account is settled according to the terms of the partnership deed. The settlement can be made in lumpsum immediately, in various installments with or without interest, or partly in cash immediately and partly in installments at agreed intervals.
2. Under Section 37 of Indian Partnership Act, 1932: In the absence of any agreement, the retiring partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (based on capital ratio).
If the firm is not in a position to make immediate payment, the amount due is transferred to the retiring partner's Loan Account.
Explanation
The textbook context explains the settlement modes for a retiring partner. The partnership deed governs the retirement terms, and in its absence, Section 37 of the Indian Partnership Act, 1932 applies. The context also mentions that when immediate payment isn't possible, the amount is transferred to a Loan Account.