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Under what ci...

Question

Under what circumstances will the premium for goodwill paid by the incoming partner not be recorded in the books of account

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Solution

When the premium for good will brought by the incoming partners is paid privately, it need not be recorded in the books of accounts.

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Q. When required amount for premium for goodwill is not brought in by new partner, goodwill account is raised in the books of the firm by debiting goodwill account and crediting partners capital account in old profit sharing ratio and written off in ______ if it agreed not show goodwill in the books of the firm OR ALTERNATIVELY premium for goodwill should be adjusted through partners capital account by debiting new partners share of goodwill to his account and crediting old partners capital accounts in _________.

Q. If the incoming partner is to bring in premium for goodwill in cash and also balance exist, in the goodwill Account, then this Goodwill Account is written off among the old partners in _________ .

A, B, C

D

were partners in a firm sharing profits in the ratio of

4 : 3 : 2 : 1

1^{s t}

January,2015, they admitted

E

as a new partner for

1 / 10 t h

share in the profits.

E

R s . 10, 000

for his share of goodwill premium which was correctly recorded in the books by the accountant. The accountant showed goodwill at

R s . 1, 00, 000

in the books. Was the accountant correct in doing so? Give reason in support of your answer.

Q. When the incoming partner brings in his share of premium for goodwill in cash, it is adjusted by crediting to ____________ .

Q. At the time of admission when goodwill account is not being opened in the books of account, credit is given to the old partner in what ratio?

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