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Classifying Items of Financial Statements

Existing good...

Question

Existing goodwill is always written off among old partners in their ________ ratio.

[0.88 marks]

A

old

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B

new

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C

sacrificing

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D

gaining

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Solution

The correct option is A old
Goodwill already exists in books of accounts belonging to old partners and is distributed amongst the old partners in the old ratio before any reconstitution takes place.

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Q. If the incoming partner is to bring in premium for goodwill in cash and also balance exist, in the goodwill Account, then this Goodwill Account is written off among the old partners in _________ .

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