Aveer, Daksh and Kridha are equal partners. They decided to change the profit sharing ratio to 4:3:2. For this purpose, goodwill of the firm was valued at Rs. 90,000. The journal entry for treatment of goodwill on change in profit sharing ratio will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Aveer's Capital A/c Dr. 10,000, To Kridha's Capital A/c 10,000
When partners change their profit sharing ratio, a partner who gains a share of future profits pays the partner who sacrifices it, for the goodwill attached to that share. The gaining partner’s capital is debited and the sacrificing partner’s capital is credited.
Old shares: Aveer 3/9, Daksh 3/9, Kridha 3/9 (equal partners)
New shares: Aveer 4/9, Daksh 3/9, Kridha 2/9
Aveer gains 4/9 − 3/9 = 1/9
Daksh: no change
Kridha sacrifices 3/9 − 2/9 = 1/9
Amount = Rs. 90,000 × 1/9 = Rs. 10,000
So Aveer’s Capital A/c is debited and Kridha’s Capital A/c is credited with Rs. 10,000. Daksh, whose share does not change, is left out of the entry.
NCERT (2026-27 edition):
|
