On the admission of new partner, if Goodwill amount is to raised, then where it should be debited?
Answer & explanation
Correct answer: option 2
Goodwill at its full value by debiting the goodwill and crediting the old partners' Capital Account in their old profit sharing ratio.
Journal Entry
Goodwill A/c Dr . XXX
To Partners' Capital A/c XXX
( Being goodwill raised)