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Question
The need for valuation of goodwill arises at the time of _______ of a business.
The need for valuation of goodwill arises at the time of _______ of a business.
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Solution
The correct option is C sale
Goodwill is one of the special aspects of partnership accounts which requires adjustment at the time of reconstitution of a firm, i.e., a change in the profit sharing ratio, the admission of a partner or the retirement or death of a partner. The need for valuation of goodwill arises at the time of sale of a business. But goodwill may also arise in the following circumstances under partnership firm:1. Change in the profit sharing ratio amongst the existing partners2. Admission of new partner3. Retirement of a partner4. Death of a partner5. Amalgamation of partnership firms
Goodwill is one of the special aspects of partnership accounts which requires adjustment at the time of reconstitution of a firm, i.e., a change in the profit sharing ratio, the admission of a partner or the retirement or death of a partner. The need for valuation of goodwill arises at the time of sale of a business. But goodwill may also arise in the following circumstances under partnership firm:
1. Change in the profit sharing ratio amongst the existing partners
2. Admission of new partner
3. Retirement of a partner
4. Death of a partner
5. Amalgamation of partnership firms
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