Question

if the new partner brings in his share of goodwill in cash and if goodwill also appears in books, how is existing amount of goodwill dealt with?

Answer 1

Answer:

(1) Write off existing goodwill

Old Partner's Capital A/C Dr. ( In old ratio )

To Goodwill A/C

(2) For Goodwill brought by new partner

Cash/Bank A/C Dr.

To Goodwill A/C

(3) Transfer of Goodwill

Goodwill A/C. Dr.

To Old Partner's Capital A/C. ( In sacrifice ratio )