Match List-I with List-II. LIST I(Type of goodwill) LIST II(Treatment…

Match List-I with List-II.

LIST I (Type of goodwill)	LIST II (Treatment to done)
(A) Existing Goodwill	(I) No entry passed
(B) Goodwill premium	(II) Calculated on the basis of capital of partners
(C) Goodwill paid privately	(III) Written off
(D) Hidden goodwill	(IV) Credited to sacrificing partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

On the admission of a partner, goodwill can reach the books in several ways, and each way has its own treatment.

(A) Existing Goodwill — this matches (III) Written off. Goodwill already appearing in the books is written off among the old partners in their old ratio at the time of admission.

(B) Goodwill premium — this matches (IV) Credited to sacrificing partner. The premium brought in by the new partner compensates the old partners for the share they give up, so it is credited to the sacrificing partners in their sacrificing ratio.

(C) Goodwill paid privately — this matches (I) No entry passed. When the new partner pays the old partners directly, the money never passes through the firm, so no entry is made in the firm’s books.

(D) Hidden goodwill — this matches (II) Calculated on the basis of capital of partners. When no value of goodwill is given, it is worked out from the capital the new partner brings for his share, compared with the total capital of the partners.

NCERT (2026-27 edition):
Treatment of Goodwill – “… When goodwill already exists in books: Goodwill, if existing in the books of the firm, it is written off at the time of admission of a partner.”

NCERT (2026-27 edition):
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.”

NCERT (2026-27 edition):
Hidden Goodwill – “… Sometimes the value of goodwill is not given at the time of admission of a new partner. In such a situation it has to be inferred from the arrangement of the capital and profit sharing ratio.”