Question

Govind, Hari and Pratap are partners. On the retirement of Govind, the goodwill already appears on the Balance Sheet at ₹24,000. The goodwill will be written off ______

Options

• by debiting all partners' capital accounts in their old profit sharing ratio.

• by debiting the remaining partners' capital accounts in their new profit sharing ratio.

• by debiting retiring partners' capital accounts from his share of goodwill.

• None of the above

Answer 1

Govind, Hari and Pratap are partners. On the retirement of Govind, the goodwill already appears on the Balance Sheet at ₹24,000. The goodwill will be written off by debiting all partners' capital accounts in their old profit sharing ratio.

Explanation:

If Goodwill already exists in the books at the time of partnership reconstitution, it is written off by debiting all partners' capital accounts and debiting Goodwill A/c.