Question

Why is goodwill written off?

Answer 1

Dear Student,

Goodwill written off at the time of Admission of a new partner: . Existing goodwill belongs to old partners only & when a new partner is admitted, old goodwill is written off in old ratio & then fresh goodwill of the firm is calculated .
On the basis of this fresh Goodwill new partner's share of goodwill is decided .

Goodwill is also written off if the partners want to revalue their assets & liabilities apart from revaluation at the time of admission.If Goodwill is revalued at some other amount than the existing one, existing is written off.

Thus, Goodwill is written off in order to divide it among the existing/old partners and then to record it at its latest/fresh valuation.

Regards,