If goodwill already exists in the books of the firm at the time of admission of a partner then it will be dealt in the following manner.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Old Partner's Capital A/c - Dr; Goodwill A/c - Cr.
Goodwill already in the books belongs to the old partners, so on admission it is written off among them in their old profit sharing ratio:
Old Partners’ Capital A/cs Dr. (old ratio)
To Goodwill A/c
The new partner’s share of goodwill is then dealt with separately.
NCERT (2026-27 edition): |