___________ method is followed when the new partner does not bring in his share of goodwill in cash.

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Revaluation

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Reconstruction

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Both a and b

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Solution

The correct option is B Revaluation
When the new partner does not bring in his share of goodwill in cash, revaluation method is followed. In such a situation, the goodwill account is raised in the books of accounts by crediting the old partners in the old profit sharing ratio. The following are the two possibilities, when goodwill account is to be raised in the books of account:
a. No goodwill appears in the books at the time of admission
b. Goodwill already exists in books at the time of admission

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Similar questions

Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash.

Q. The new partner does not bring cash for his share of goodwill under the______.

Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash.?

Amar and Akbar are equal partners in a firm. They admitted Anthony as a new partner and the new profit sharing ratio is 4 : 3 : 2. Anthony could not bring his share of goodwill Rs. 45,000 in cash. It is decided to do the adjustment for goodwill without opening Goodwill account. Pass the necessary journal entry for the treatment of goodwill.

Q. The new partner brings cash for his share of goodwill and the same is shared by the old partners in their sacrificing ratio. The method is called __________.

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