Question

Select the Correct Alternative:
(i) At the time of dissolution of the firm, if goodwill appears in the Balance Sheet, it is transferred to
(a) Realisation Account.
(b) Partners' Capital Accounts.
(c) Revaluation Account.
ina in the Balance Shoot​

Answer 1

ANSWER

Treatment of goodwill is very easy in case of dissolution of a firm. In case, if goodwill is already appearing in the balance sheet, it is treated like any other asset, and is transferred to the realisation account at the value given in balance sheet. Following entry is passed for it.

Realisation A/c Dr.

To Goodwill A/c