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Classifying Items of Financial Statements

When the inco...

Question

When the incoming partner bring his share of goodwill in cash, which of these methods of revaluation of goodwill is appropriate?

A

Revaluation method

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B

Memorandum revaluation method

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C

Premium method

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D

Any of the above

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Solution

The correct option is C Premium method
Under the premium method the incoming partner brings some proportionate share in form of goodwill in cash it maybe retained in the business and can be withdrawn by old partner in sacrifices ratio.

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Similar questions

Q. Which of the following method is followed when incoming partner brings his share of Goodwill in cash___________.

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

Q. ___________ method is followed when the new partner does not bring in his share of goodwill in cash.

Q. New incoming partner pays his share of goodwill in cash and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners ____________.

Q. A & B having share capital of Rs.

10, 000

each, share profits and losses equally. They admit C as an equal partner and goodwill was valued as Rs.

30, 000

(book value NIL). C is to bring in Rs.

20, 000

as his capital and the necessary cash towards his share of Goodwill. Goodwill Account will not be shown in the books. If profit on revaluation is Rs.

13, 000

, find the closing balance of the capital account.

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