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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
Solution
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.