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 _________ .

the new profit-sharing ratio

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the old profit-sharing ratio

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the sacrifice ratio

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none of the above

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Solution

The correct option is C the old profit-sharing ratio
If the incoming partner brings premium for goodwill in cash and goodwill already exists in the books of the firm, this goodwill that already exists in the books of the firm is distributed among the existing partners in their old profit sharing ratio. The new partner is not entitled to share in this goodwill since he was not a part of the firm when this goodwill was earned by the old partners. Since, the firm is reconstituted at the time of admission, the existing goodwill is written off.

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