CUET Preparation Today
When the new partners pay premium for goodwill privately to the sacrificing partners, where will it be shown? |
Capital accounts of old partners Capital accounts of all partners Not shown in books of account Either option 1 or 2 |
Not shown in books of account |
The correct answer is option 3- Not shown in books of account. 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. If this amount is paid to the old partners directly (privately) by the new partner, no entry is passed in the books of the firm. |
