Question

Write a short note on the accounting treatment of goodwill.

Answer 1

1. For the goodwill brought in cash credited to old partner’s capital account

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Cash/Bank A/c ........Dr. To old partner's capital/current A/c (in sacrificing ratio)		xxx -	- xxx

2. For the goodwill brought in kind (in the form of asset) credited to old partner’s capital account

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Respective Assets A/c ........Dr. To old partner's capital/current A/c (in sacrificing ratio)		xxx -	- xxx

3. For withdrawal of cash received for goodwill by the old partners

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Old partner's capital/current A/c ..........Dr. To Cash/Bank A/c		xxx -	- xxx