Need for valuation of goodwill arises in the following circumstances:
(A) Admission of a new partner
(B) Change in profit sharing ratio among the existing partners
(C) Dissolution of the partnership firm involving sale of business as a going concern
(D) Death of a partner
Choose the correct answer from the options given below:

Question

According to Securities and Exchange Board of India (SEBI) guidelines, minimum subscription of capital cannot be less than 90 of:

Answer 1

Goodwill valuation is essential in several partnership firm scenarios. Let's examine each case:

Admission of a new partner (A):

Upon admitting a new partner, goodwill is valued to ascertain their stake in the business. Typically, existing partners allocate their goodwill share to the new partner as per the agreement.

Alteration of profit-sharing ratio among existing partners (B):

When the profit-sharing ratio changes among existing partners, goodwill must be revalued due to the potential impact on the firm's overall value distribution.

Dissolution of partnership with sale of business as a going concern (C):

In partnership dissolution, if the business is sold as a going concern, goodwill's value influences the business's total valuation and requires adjustment among partners.

Death of a partner (D):

Upon a partner's death, their goodwill share is computed and transferred to their legal heirs or the surviving partners, contingent on the partnership agreement.

Goodwill valuation is necessitated in all presented situations, thus the accurate response is (C): (A), (B), (C), and (D).

List - I	List - II
(A) Authorised Capital	(II) Maximum amount of share capital a company could raise during its lifetime
(B) Reserve Capital	(I) A portion of uncalled share capital will be called at the time of winding up
(C) Issued Capital	(III) Capital issued to public for subscription
(D) Subscribed but not fully paid capital	(IV) Amount called up and received but not fully paid

The Correct Option is C