Question

At the time of admission of a partner, if goodwill exists in the books of accounts, it will be written off among:

• A. Old partners in sacrificing ratio
• B. All the partners in new ratio
• C. New partners in gaining ratio
• D. Old partners in old profit-sharing ratio

Hint:

Existing goodwill is written off among old partners in their old profit-sharing ratio at admission of a new partner.

Answer 1

The Correct Option is D

Step 1: Understanding goodwill treatment at admission
When a new partner is admitted and goodwill already exists in the books, it is written off to adjust the existing goodwill among the old partners.
Step 2: Old profit-sharing ratio
The goodwill balance is written off among the old partners in their old profit-sharing ratio (the ratio before admission of the new partner).
Step 3: Reason
This adjustment ensures the new partner does not benefit from goodwill created prior to admission.
Step 4: Conclusion
Therefore, goodwill is written off among old partners in the old profit-sharing ratio.