In the context of a partnership firm, need for valuation of goodwill arises in the following circumstances.

A. Change in the profit sharing ratio among the existing partners.

B. Admission of new partner

C. Retirement of a partner

D. Amalgamation of partnership firms

E. When firms earns super profits.

Choose the correct answer from the options given below :

A, B, C and D only

The correct answer is option 3- A, B, C and D only.

Goodwill is an intangible asset that represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Normally, the need for valuation of goodwill arises at the time of sale of a business. But, in the context of a partnership firm it may also arise in the following circumstances:
1. Change in the profit sharing ratio amongst the existing partners;
2. Admission of new partner;
3. Retirement of a partner;
4. Death of a partner
5. Amalgamation of partnership firms.