Question

When goodwill is not recorded in the books at all on admission of a partners ?​

Answer 1

Answer:

Case 1: When goodwill does not appears in the books

By debiting the Goodwill Account and crediting all the partner's (including the retired/deceased partner) capital accounts in the old profit sharing ratio. The full value of goodwill will appear on the balance sheet of the reconstituted firm.

Answer 2

$\huge{\mathfrak{\underline{\underline{\pink{Answer}}}}}$Answer:

The accounting treatment of such goodwill is as follows: Old partner's Capital A/c Dr. The entry to write off existing goodwill is always passed whether the goodwill is brought in cash or not. After passing the above entry, goodwill will not appear in the new balance sheet.

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