Question

which A/C to be debited when goodwill is written off after the admission of partner?
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Answer 1

Explanation:

In the event of Reconstitution of Partnership, whenever there is increase in the profit share of a partner, it means that such partner purchases share of profit from other partner or partners by acquiring his or their share. The partner whose share of profit increases should compensate the partner or partners whose share(s) is decreased i.e. gaining partners should compensate sacrificing partner(s). This compensation payable by the gaining partner for his gain to the sacrificing partner or partners is known as Goodwill or Premium for Goodwill. Therefore, while recording such compensation following entries are passed to the respective gaining and sacriificing partners' capital accounts.