Explain how is goodwill treated in the books of accounts when the coming partner does not bring his share of goodwill in cash.What journal entries are to be passed when asset and liabilities are revaluated at the time of new partner
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TREATMENT OF GOODWILL
New Partner's Capital a/c Dr.
To Old Partner's Capital a/c
(Being goodwill distributed among old partner's in sacrificing ratio)
REVALUATION OF ASSETS
Asset a/c Dr.
To Old Partner's Capital a/c
(Being assets written off)
REVALUATION OF LIABILITIES
Old Partner's Capital a/c Dr.
To Liabilities a/c
(Being liabilities written off)
New Partner's Capital a/c Dr.
To Old Partner's Capital a/c
(Being goodwill distributed among old partner's in sacrificing ratio)
REVALUATION OF ASSETS
Asset a/c Dr.
To Old Partner's Capital a/c
(Being assets written off)
REVALUATION OF LIABILITIES
Old Partner's Capital a/c Dr.
To Liabilities a/c
(Being liabilities written off)
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