When a new partner is entered into firm, goodwill already appeared in books of accounts of firm, should be written off in which of the following.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Old Profit Sharing Ratio
Goodwill already in the books was earned by the old partners. So, on the admission of a partner, it is written off to their capital accounts in the old ratio; the incoming partner bears none of it. The new value of goodwill is then given effect separately.
Why the other options are incorrect
Option (1) New Profit Sharing Ratio — Incorrect. The new ratio includes the incoming partner, so writing off in it would make him bear a loss of goodwill he had no part in earning.
Option (2) Gaining Ratio — Incorrect. A gaining ratio arises when continuing partners take a larger share, as on retirement or death; on admission the old partners gain nothing, they give up share.
Option (4) Sacrificing Ratio — Incorrect. The sacrificing ratio is used to share the new partner’s premium for goodwill, not to write off goodwill already in the books.
NCERT (2026-27 edition): |