At the time of change in profit sharing ratio, existing goodwill is w…

The correct answer is Option (3) → Old Ratio

Goodwill already in the books was built up while the partners shared profits in the old ratio. On any reconstitution, including a change in the profit sharing ratio, it is written off by debiting all partners’ capital accounts in their old ratio; the new goodwill adjustment is then made separately between the gaining and sacrificing partners.

Option (1) Sacrificing Ratio — Incorrect. The sacrificing ratio is used to compensate the sacrificing partners for goodwill, not to write off goodwill already in the books.

Option (2) Equal Ratio — Incorrect. Equal sharing applies only when the partners’ ratio is itself equal or no ratio is agreed.

Option (4) Gaining Ratio — Incorrect. The gaining partners pay for the share they gain, but existing goodwill belongs to all partners in their old ratio.