On retirement of a partner, gaining ratio is computed as

1. When a partner retires, the continuing partners' shares increase. 2. Gaining ratio = New ratio − Old ratio (positive values). 3. It indicates how much each remaining partner gains and is used to compensate the retiring partner for goodwill. 4. Hence (A) is correct. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 4 "Reconstitution of Partnership (Retirement of Partner)", §4.1 ¶§4.1_