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Question
Piyush, Rajesh and Avinash were partners in a firm sharing profits and losses equally. Shiva was admitted as a new partner for an equal share. Shiva brought his share of capital and premium for goodwill in cash. The premium for the goodwill amount will be debited among ______.
Options
Old partners in old ratio
New partners in new ratio
New partners in sacrificing ratio
Old partners in sacrificing ratio
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Solution
Piyush, Rajesh and Avinash were partners in a firm sharing profits and losses equally. Shiva was admitted as a new partner for an equal share. Shiva brought his share of capital and premium for goodwill in cash. The premium for the goodwill amount will be debited among old partners in sacrificing ratio.
Explanation:
When a new partner brings their share of goodwill (premium) in cash, the amount is distributed as compensation to the partners who have sacrificed their share of future profits. This distribution is always made exclusively to the old partners in the proportion of their sacrificing ratio.
