Question

New incoming partner pays his share of goodwill in cash and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners ____________.

• A. At their old profit ratio
• B. According to new ratio
• C. According to sacrifice ratio
• D. None of the above

Answer 1

The correct option is A At their old profit ratio

According to section 32 of the Indian Partnership Act, 1932, when a new partner pays his share of goodwill in cash, then the profit sharing ratio changes. Hence, goodwill will be distributed among old partners at their old profit ratio only.