CUET Preparation Today
Partners Aakash, Bharat, and Chirag are in partnership. On Aakash’s retirement, goodwill already appearing in the books amounts to ₹24,000. How should this goodwill be treated in the accounts on the retirement of partner? |
It should be written off by debiting all partners' capital accounts in their old profit-sharing ratio It should be written off by debiting the continuing partners' capital accounts in the new profit-sharing ratio It should be written off by debiting only the retiring partner’s capital account for his share of goodwill It should be written off by crediting all partners’ capital accounts in their old profit-sharing ratio |
It should be written off by debiting all partners' capital accounts in their old profit-sharing ratio |
The correct answer is option 1- It should be written off by debiting all partners' capital accounts in their old profit-sharing ratio. Existing goodwill is written off by debiting old partners capital account in their old ratio and crediting goodwill. It will reduce the capital balance of the all the old partners account including retiring partner. |
