Retirement of Partner occurs when partner leaves partnership; requires settlement of their interest. Key Issues: Goodwill treatment (retirement partner's share of good), Amount due to retiring partner, Settlement terms. Calculation of Amount Due: Opening Capital + Share of Profit - Share of Losses - Drawings + Interest on Capital - Interest on Drawings. Add: Share of Goodwill, Unrealized Appreciation in Assets. Deduct: Share of Unrealized Depreciation in Assets, Liabilities Taken Over by Partner. Goodwill Treatment: Share of Goodwill credited to retiring partner in capital account, Debit to continuing partners' capital in new profit-sharing ratio. Revaluation of Assets: Prepare Revaluation Account showing gains/losses on assets, Transfer to partners' capital accounts in old ratio. Final Settlement: Total amount due may exceed retiring partner's capital, Difference recorded as liability (payable over time per agreement), Or paid immediately from partnership bank account. Balance Sheet After Retirement: Remove retiring partner's capital account, Adjust continuing partners' capital accounts, Record liability if amount is not immediately paid, Adjust for asset revaluations. Continuing Partners' New Ratio: Calculate new profit-sharing ratio among remaining partners. Exam tip: Master the calculation of amount due to retiring partner; practice goodwill and revaluation accounting; understand settlement terms; handle contingent liabilities for deferred payments.