Question

When existing Goodwill is written off, is the partner's Capital Account debited or credited?

Answer 1

When a new partner is admitted, goodwill of the business is valued afresh. For this, the goodwill that already appears in the books of accounts is written off and is transferred to the old partner's capitals accounts in their old profit sharing ratio. The old partner's capital accounts are debited with their share of goodwill.

The accounting entry is:

Partner's capital a/c.... Dr.

To Goodwill a/c