Question

Towards goodwill a new partner at the time of admission contributes _______.

• A. In cash
• B. Does not pay cash
• C. May or may not pay cash for goodwill
• D. None of the above

Answer 1

The correct option is C May or may not pay cash for goodwill

When a new partner enters in the partnership firm , the old partner sacrifices for him , so it is the duty of new partner to give goodwill in cash or in any other way to old partner . Accounting for admission of new partner depends on the nature of arrangement between the existing partners and the new partners . Such an arrangement can take any of the following firm -

a. The new partner brings in new assets.

b. The new partner pays a bonus for the partnership's goodwill etc.