CUET Preparation Today
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. |
Old Partner's Capital A/c - Dr; Goodwill A/c - Cr. New Partner's Capital A/c - Dr; Goodwill A/c - Cr. Gaining Partner's Capital A/c - Dr; Sacrificing Partner's Capital A/c - Cr. Sacrificing Partner's Capital A/c - Dr; Gaining Partner's Capital A/c - Cr. |
Old Partner's Capital A/c - Dr; Goodwill A/c - Cr. |
The correct answer is Option (1) → Old Partner's Capital A/c - Dr; Goodwill A/c - Cr. Goodwill appearing in the books will be written-off by debiting old partners' capital accounts in their old profit sharing ratio. It reduces the capital balance of old partners and also eliminate goodwill. |
