Business Studies, asked by noorjotsinghman4352, 1 year ago

How will you deal with goodwill when there is change in profit sharing ratio among existing partners?

Answers

Answered by Anonymous

1

Explanation:

Accounting treatment in case of the change in Profit Sharing Ratio (PSR) When there is any change in the profit sharing ratio of partners, Goodwill is valued.

Debit the Gaining partner's capital account and credit the sacrificing partner's capital account.

The basis of this adjustment is the profit sacrificing ratio.

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