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Why a Retiring/Deceased Partner is Entitled to a Share of Goodwill of the Firm? - Accountancy

Short Note

Why a retiring/deceased partner is entitled to a share of goodwill of the firm?

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Solution

Goodwill is an intangible asset of a firm that is earned by the efforts of all the partners of the firm. After the retirement or death of a partner, the fruits of the past performance and reputation will be shared only by the remaining partners. Thus the remaining partners should compensate the retiring or the deceased partner by entitling him/her a share of firm's goodwill.

Concept: Ascertaining the Amount Due to Retiring/Deceased Partner
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner
Exercise | Q 5 | Page 214
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