Explain the treatment of goodwill in the books of a firm on admission of a partner when godwill appears in the Balance Sheet.
Explain the treatment of goodwill in the books of a firm on admission of a partner when godwill appears in the Balance Sheet.
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Existing goodwill, (i.e., goodwill appearing in the Balance Sheet) is written off to the Old Partner’s Capital Accounts in their old profit-sharing ratio.
Old Partner’s Capital A/cs Dr.
To Goodwill A/c
(Being the existing goodwill written off in the old ratio)
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