Question

Why existing goodwill in Balance sheet is distributed among old partners ?

Answer 1

Because this goodwill occurs because of the old partners and the new partner has no right over it. Example Suppose you and your friend earns 100 rupees each day together and you manage to save 1000 over a month. Now your other friend wants to join you, Now think if you did not distribute the 1000 ruppees you will have to give share to your friend also in future. Hence it is necessary that you will first distribute money among yourself then starts again. Same is the case for goodwill.