Consider the following facts related to valuation of goodwill. Select, out of the following, the occasions when the need for valuation of goodwill arises.
(A) Admission of partner
(B) Expansion of operation
(C) Retirement of partner
(D) Death of a partner
(E) Amalgamation of partnership firms
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (C), (D) and (E) only
Goodwill has to be valued whenever the firm is reconstituted or sold as a going concern.
(A) Admission of partner — True. The new partner compensates the old partners for their share of goodwill.
(B) Expansion of operation — False. Expanding the business changes no partner's share, so goodwill need not be valued.
(C) Retirement of partner — True. The retiring partner is paid for his share of goodwill.
(D) Death of a partner — True. The deceased partner's executors get his share of goodwill.
(E) Amalgamation of partnership firms — True. The goodwill each firm brings in must be valued.
NCERT (2026-27 edition):
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