How do you calculate the capital of a newly admitted partner when goodwill is written against the new partners capital account. Also how do you calculate the current accounts
Answers
Answer:
the Goodwill of a newly admitted partner is a part of his share from the total Goodwill of the firm
latest to compensate the sacrifice of old partners
it is distributed in the capital accounts of old partners in their sacrifice ratio
current account is an account prepared to record the adjustments other than the fixed capital of partners
current account can have a credit or debit balance
the accounts are summed up
if current account shows debit balance, that is the debit side of current account is more than the credit side then it is showed on the the asset side of balance sheet
if there is a credit balance of current account which means the credit side is greater than debit side the balance is shown on the liabilities side of balance sheet.
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