when the goodwill is given into the old balance sheet of the firm then how we can calculate it
when the goodwill is given into the old balance sheet of the firm then how we can calculate it
At the time of admission, the new partner brings premium for goodwill in order to compensate the existing partners for the sacrifice of their profit share in favour of the new partner. The goodwill so brought in by the new partner is distributed among the existing partners in their sacrificing ratio. Sometimes, there may be a situation when at the time of admission of a new partner, goodwill already appears in the old Balance Sheet. In such a case, existing goodwill is first written-off among the old partners in their old ratio and the premium for goodwill brought in by the new partner is distributed among the existing partners in their sacrificing ratio. In case, the amount of goodwill brought in by the new partner is not given in the question, then the same need to be calculated at the time of admission.
At the time of admission, the new partner brings premium for goodwill in order to compensate the existing partners for the sacrifice of their profit share in favour of the new partner. The goodwill so brought in by the new partner is distributed among the existing partners in their sacrificing ratio. Sometimes, there may be a situation when at the time of admission of a new partner, goodwill already appears in the old Balance Sheet. In such a case, existing goodwill is first written-off among the old partners in their old ratio and the premium for goodwill brought in by the new partner is distributed among the existing partners in their sacrificing ratio. In case, the amount of goodwill brought in by the new partner is not given in the question, then the same need to be calculated at the time of admission.
