Goodwill, if existing in the books of the firm, is written off at the time of admission of a partner, and is:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → To be debited among old partners in their old profit sharing ratio.
Goodwill already standing in the books was built up while only the old partners were in the firm. On admission it is written off, and since writing off an asset is a loss, the old partners’ capital accounts are debited in their old ratio. The new partner bears none of it, because he joins only after the write-off.
Why the other options are incorrect
Option (2) To be debited among remaining partners in their new profit sharing ratio. — Incorrect. The new ratio governs only future profits; the old goodwill belongs to the period before admission. “Remaining partners” is also the language of retirement, not admission.
Option (3) To be debited among gaining partners in their old profit sharing ratio. — Incorrect. On admission the old partners sacrifice a share; there are no gaining old partners to charge.
Option (4) To be credited among old partners in their old profit sharing ratio. — Incorrect. Writing off an asset reduces the partners’ claims, so their accounts are debited, not credited.
NCERT (2026-27 edition): |