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Question

Under the memorandum revaluation method ___________.

A
the new partner does not bring cash for his share of goodwill
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B
the new partner brings cash for his share of goodwill
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C
goodwill is raised in the books, and then is immediately written off
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D
None of the Above
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Solution

The correct option is C goodwill is raised in the books, and then is immediately written off
Memorandum revaluation account is prepared when at the time of admission/retirement of partner, the partnership firm does not want to change the value of assets and liabilities in the balance sheet but want to give effect of it through partner's capital account. Hence, under this method, goodwill is raised in the books and then immediately written off.

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