How is the retiring/deceased partner compensated for his share of goodwill?
Answer & explanation
Correct answer: option 4
The remaining partners who will be gained on retirement or death will compensate the retiring partner for his share of goodwill. The capital account of the remaining partners will be debited and the capital account of the deceased or retiring partner will be credited for his share of goodwill. The gaining partner will compensate the retiring partners in gaining ratio.