A and B were partners sharing profit and losses in ratio 3:2. They decided to change their ratio. For this purpose, the value of firm's Goodwill was discovered at Rs 1,20,000. Whereas the firm's book has the Goodwill worth of Rs 80,000. How will it be treated?

₹80,000 will be written off to Partner's A/c

Firm's book Goodwill i.e. ₹80,000 will be written off to Partner's A/c in old ratio.