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Question
How will you deal Goodwill at the time of retirement of a partner?
Short Answer
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Solution
At the time of retirement of a partner, the firm's goodwill is valued to compensate the retiring partner for their share in it. The remaining partners pay this amount to the retiring partner in the ratio of the benefit they get from the retirement. If goodwill is already shown in the books, it may be written off. If it's not mentioned but the retiring partner gets more than their share, the extra amount is treated as hidden goodwill.
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