Accounting · Partnership Accounts
When a new partner is admitted into a partnership firm and goodwill already exists in the books of accounts, what is the standard treatment of this existing goodwill?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Goodwill is ignored entirely at the time of admission of a new partner.
- 2Goodwill is adjusted only in cash and never through capital accounts.
- 3Existing goodwill must be written off among the old partners in their old profit-sharing ratio.✓
- 4Goodwill already appearing in the books is always retained without any adjustment.
Correct answer
Existing goodwill must be written off among the old partners in their old profit-sharing ratio.
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