Reconstitution of a Partnership Firm – Admission of a Partner · Class 12 · CBSE · Commerce Accountancy
When the new partner brings their share of goodwill in cash, and it is retained in the business, how is the amount of premium for goodwill treated?
Practice question from Reconstitution of a Partnership Firm – Admission of a Partner (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
easy · MCQ · Q-3A7828
When the new partner brings their share of goodwill in cash, and it is retained in the business, how is the amount of premium for goodwill treated?
- A.Credited to sacrificing partners' capital accounts in sacrificing ratioCorrect answer
- B.Credited to all partners' capital accounts in old ratio
- C.Credited to new partner's capital account
- D.Debited to revaluation account
Solution
When a new partner brings premium for goodwill in cash, it is distributed among the sacrificing partners in their sacrificing ratio by crediting their capital accounts.
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