Accountancy Part AAdmission of a Partner

The goodwill brought in by the new partner is distributed by old part…

The goodwill brought in by the new partner is distributed by old partner their:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → sacrificing ratio

The new partner brings goodwill (premium) to make good the share of profit the old partners give up for him. So it is shared only by the partners who sacrifice, in the ratio of their sacrifice: the sacrificing ratio.

Option (1) new profit sharing ratio — Incorrect. The new ratio includes the new partner, who cannot be compensated for his own admission.

Option (3) capital ratio — Incorrect. Goodwill compensates for loss of profit share, which has nothing to do with capitals.

Option (4) equally — Incorrect. The partners give up different shares, so they are compensated in that proportion, not equally.

NCERT (2026-27 edition):
Sacrificing Ratio – “… As stated earlier, the new partner is required to compensate the old partner’s for their loss of share in the super profits of the firm for which he brings in an additional amount as premium for goodwill. This amount is shared by the existing partners in the ratio in which they forgo their shares in favour of the new partner which is called sacrificing ratio.”