At the time of admission of partner, if goodwill exist in the books of account it will be written off among:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Old partners in old profit sharing ratio
Goodwill already in the books was built up while the old partners alone shared the profits, so it belongs to them in the ratio in which they shared those profits. On admission it is written off by debiting the old partners’ capital accounts in their old profit sharing ratio: Old Partners’ Capital A/cs Dr. To Goodwill A/c.
Why the other options are incorrect
Option (1) Old partners in sacrificing ratio — Incorrect. The sacrificing ratio is used for the new partner’s premium for goodwill, not for writing off goodwill already in the books.
Option (2) All the partners in new ratio — Incorrect. The new partner had no share in the past profits that created this goodwill, so he bears none of it.
Option (3) New partners in gaining ratio — Incorrect. A gaining ratio arises on retirement or death, and a new partner is not charged with old goodwill.
NCERT (2026-27 edition): |