Arrange the following statements in proper sequence in context of admission of partner.

A. Finalising terms for admission of new partner
B. Calculation of sacrificing/ gaining ratio
C. Finalising balance in partner's capital A/c
D. Calculation of new profit sharing ratio
E. Valuation and adjustment of goodwill

Choose the correct answer from the options given below:

A, D, B, E, C

The correct answer is Option (2) - A, D, B, E, C.

Finalising terms for admission of new partner (A): This step involves determining the conditions and terms under which the new partner will be admitted. This includes discussions on the new partner's capital contribution, profit-sharing ratio, rights, and responsibilities.

Calculation of new profit-sharing ratio (D): Once the terms are finalized, the next step is to calculate the new profit-sharing ratio. This ratio determines how the profits and losses of the business will be shared among the existing and new partners.

Calculation of sacrificing/gaining ratio (B): The sacrificing/gaining ratio is calculated to determine how the existing partners' profit-sharing ratios will be affected by the admission of the new partner. It helps in understanding the adjustments needed to accommodate the new partner.

Valuation and adjustment of goodwill (E): Goodwill is an intangible asset that represents the reputation and customer relationships of a business. When a new partner is admitted, the existing goodwill needs to be revalued, and adjustments are made to account for the change in ownership structure.

Finalising balance in partner's capital account (C): After determining the new profit-sharing ratio and making adjustments for goodwill, the capital accounts of all partners, including the new one, need to be finalized. This involves updating the capital accounts to reflect the changes in the partnership structure due to the admission of the new partner.