Amar & Akbar were partners in a firm sharing P & L in ratio 3 : 2. Their Balance Sheet as at March 31, 2023 was as under:

They admitted Anthony as a new partner for 1/5 share which he acquired equally from Amar and Akbar.

Based on above information, answer questions.

For Goodwill appearing in the Book, which of the following holds true?

Written off in Old Ratio

The correct answer is Option (3) - Written off in Old Ratio.

When a new partner is admitted, goodwill of the business is valued afresh. For this, the goodwill that already appears in the books of accounts is written off and is transferred to the old partner's capitals accounts in their old profit-sharing ratio. The old partner's capital accounts are debited with their share of goodwill.