Question

The value of goodwill is directly proportional to amount of capital employed in the business whether this statement is true or false

Answer 1

Explanation:

Under this method, when the incoming partner brings his share of goodwill in cash, the existing partners share it in the sacrificing ratio. However, when the amount of goodwill is paid privately by the new partner to old partners privately in cash, no entry is passed in the books of the firm.

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