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:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
Creditor |
50,000 |
Land & Building |
2,50,000 |
|
Bank Loan |
2,00,000 |
Plant & Machinery |
1,80,000 |
|
Amar Capital |
2,80,000 |
Goodwill |
1,00,000 |
|
Akbar Capital |
1,20,000 |
Stock |
60,000 |
|
|
|
Debtor |
40,000 |
|
|
|
Bank |
20,000 |
|
|
6,50,000 |
|
6,50,000 |
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 books, which of the following holds true?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Written off in Old Ratio
Goodwill already shown in the books belongs to the old partners, who earned it. On the admission of a new partner it is written off by debiting the old partners’ capital accounts in their old profit sharing ratio (3 : 2 here), so the new partner bears no part of it.
Option (1) Written off in equal proportion — Incorrect. Equal sharing applies only if the old ratio itself is equal; here it is 3 : 2.
Option (2) Written off in Capital proportion — Incorrect. Goodwill is written off in the profit sharing ratio, not in the capital ratio.
Option (4) Will continue to appear in New Book — Incorrect. Existing goodwill is written off at the time of admission; it is not carried forward.
NCERT (2026-27 edition):
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