Assertion (A): At the time of retirement of a partner, besides the Retiring partner, if a continuing partner also sacrifices his profit share, he along with the retiring partner will get share in firm’s goodwill equal to the profit share sacrificed.
Assertion (A): At the time of retirement of a partner, besides the Retiring partner, if a continuing partner also sacrifices his profit share, he along with the retiring partner will get share in firm’s goodwill equal to the profit share sacrificed.
Reason (R): Goodwill is paid by the Gaining Partners to the Sacrificing Partners for sacrificing their profit share.
Anurag Pathak Changed status to publish July 2, 2023
Ans – a)
Goodwill is the expected future profits that would be earned in future on the basis of efforts made till date. If a partner sacfices his share, he will get less share out of it equal to the sacrificed share. On the other hand, gaining partners, will get more share to the extent of share gain by them.
Thus gaining partners compensate the goodwill amount to the sacrificing partners equal to the gain and sacrifice in profit share.
Anurag Pathak Changed status to publish July 2, 2023
