Question

If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?

Answer 1

If goodwill already appears in the books of old firm (before the admission of new partner), then this should be written off among the old partners in their old profit sharing ratio. The following Journal entry is passed.

Old Partner’s Capital A/c                                                        Dr.
          To Goodwill A/c
(Goodwill written off in old ratio among the old partners)