G, H and P are partners. On retirement of G, the goodwill already appears in the Balance Sheet at ₹24,000. The goodwill will be written-off.......
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → By debiting all partners capital accounts in their old profit sharing ratio
Goodwill already in the balance sheet belongs to the old firm, in which all the partners, G included, shared in the old ratio. On G’s retirement it is written off to all the partners’ capital accounts in the old profit sharing ratio; only after that is G’s share of goodwill adjusted afresh.
Why the other options are incorrect
Option (2) By debiting remaining partners capital accounts in their new profit sharing ratio. — Incorrect. It leaves out G, who shared in the goodwill when it was raised, and uses the new ratio for a balance of the old firm.
Option (3) By debiting retiring partners’ capital accounts from his share of goodwill. — Incorrect. The whole goodwill is written off among all partners, not only G’s part against G.
Option (4) By debiting retiring partners’ capital accounts in gaining ratio. — Incorrect. The gaining ratio is used to compensate the retiring partner for his share of goodwill, not to write off goodwill already in the books.
NCERT (2026-27 edition):
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