logic behind the debiting the new partner and crediting the old partner?
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Answer:
Because due to following reasons:-
Explanation:
When a new partner joins a partnership the old partnership is dissolved and a new partnership is formed. Accounting for admission of new partner depends on the nature of arrangement between the existing partners and the new partner. Such an arrangement can take any of the following forms:
The new partner brings in new assets
The new partner purchases interest in partnership from existing partners at book value
The new partner pays a bonus for the partnership's goodwill; and
The new partner receives a bonus for the partnership's negative goodwill.
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