Question

At the time of admission of a partner, if goodwill exists in the books of accounts, it will be written off among:

• A. Old partners in sacrificing ratio
• B. All the partners in new ratio
• C. New partners in gaining ratio
• D. Old partners in old profit-sharing ratio

Hint:

Existing goodwill is written off among old partners in their old profit-sharing ratio at admission of a new partner.

Answer 1

The Correct Option is D

Step 1: Goodwill Upon Admission
When a new partner joins, existing goodwill on the books is written off. This process redistributes the prior goodwill among the existing partners.
Step 2: Allocation Ratio
The goodwill to be written off is distributed to the old partners based on their original profit-sharing ratio, which predates the new partner's entry.
Step 3: Rationale
This write-off prevents the incoming partner from gaining value from goodwill generated before their admission.
Step 4: Summary
Consequently, existing goodwill is eliminated among the original partners using their initial profit-sharing ratio.