State the need for treatment of goodwill on admission of a partner.

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Solution

A partner is required to compensate the partner(s) who has (have) made the sacrifice of share of profit in his favour. While accepting a new partner, the existing firm has been a successful going concern and the compensation/reward is given to the old (existing) partner(s).

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Explain various methods for the treatment of goodwill on the admission of a new partner.

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