Question

In the event of amalgamation of partnership firms, the goodwill of each partner is credited to the partners of the respective firms in ________________.

• A. Old profit sharing ratio
• B. New profit sharing ratio
• C. Capital ratio
• D. Gaining ratio

Answer 1

The correct option is B New profit sharing ratio

For Adjustment of Goodwill in case of amalgamation : The good will transferred from the old firm to the new firm may be maintained as it is or may be written off or may be reduced by the New Firm. If the goodwill is written off or reduced the entry will be as follows :

All Partner's Capital A/cs .............. Dr.

To Goodwill A/c

(All partner's capital A/c are debited in the new profit sharing ratio)