Rohan, Bharti and Leela are partners. On the retirement of Rohan, the goodwill already appears in the balance sheet at Rs. 24,000. The goodwill will be written-off:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → By debiting all partners' capital accounts in their old profit-sharing ratio.
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When goodwill already appears in the Balance Sheet and a partner retires, it must be written off before adjusting for the retiring partner’s share.
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The existing goodwill represents a past benefit shared by all partners in their old profit-sharing ratio.
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Hence, it should be written off (i.e., reduced to zero) by debited to all partners’ capital accounts in that old ratio.