Amar & Akbar were partners in a firm sharing P & L in ratio 3 : 2. Their Balance Sheet as at March 31, 2023 was as under:

They admitted Anthony as a new partner for 1/5 share which he acquired equally from Amar and Akbar.

Based on above information, answer questions.

Goodwill share brought in by Anthony will be distributed in:

Sacrificing ratio

The correct answer is Option (2) - Sacrificing ratio.

The incoming partner who acquires his share in the profits of the firm from the existing partners brings in additional amount to compensate them for loss of their share in super profits. It is termed as his share of goodwill (also called premium for goodwill). When the new Partner brings goodwill in cash. The amount of premium brought in by the new partner is shared by the existing partners in their ratio of sacrifice.