Assertion: The amount of goodwill brought in by the new partner is divided between the existing partners in their sacrificing ratio.
Reasoning: The new partner acquires his/her share profit from the existing partners.
Reasoning: The new partner acquires his/her share profit from the existing partners.
Answer & explanation
Correct answer: option 1
Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.
The amount of goodwill brought in by the incoming partner is taken to the books of account. The existing partners apportion the goodwill among themselves in the sacrificing ratio.
When new partner is admitted he acquires his share in profits from the old partners. In other words, on the admission of a new partner, the old partners sacrifice a share of their profit in favour of the new partner.
The amount of goodwill brought in by the incoming partner is taken to the books of account. The existing partners apportion the goodwill among themselves in the sacrificing ratio.
When new partner is admitted he acquires his share in profits from the old partners. In other words, on the admission of a new partner, the old partners sacrifice a share of their profit in favour of the new partner.