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When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say?
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When the existing goodwill in books is written-off at the time of admi...
Explanation:
Goodwill Write-off at the time of admission of new partner:
- When the existing goodwill in books is written-off at the time of admission of a new partner, it means that the value of goodwill is removed from the books of accounts.
- This is done to adjust the new partner's capital in the business based on the actual value of the business without considering the existing goodwill.
- The existing partners usually bear the loss of goodwill in their profit-sharing ratio, and the new partner does not contribute any amount towards this goodwill.
Effect on New Partner's Capital Account:
- The new partner's capital account is not debited when the existing goodwill is written-off because the new partner is not required to bring in any amount for the goodwill.
- Instead, the new partner's capital account is credited with the amount equivalent to the share of goodwill written off from the existing partners' capital accounts.
- This adjustment ensures that the new partner's capital reflects the actual value of the business without considering the goodwill that was present before the admission of the new partner.
Conclusion:
- Therefore, it is true that the new partners' capital account is not debited when the existing goodwill in books is written off at the time of admission of a new partner. This adjustment helps in maintaining the transparency and accuracy of the new partner's capital in the business.
Goodwill Write-off at the time of admission of new partner:
- When the existing goodwill in books is written-off at the time of admission of a new partner, it means that the value of goodwill is removed from the books of accounts.
- This is done to adjust the new partner's capital in the business based on the actual value of the business without considering the existing goodwill.
- The existing partners usually bear the loss of goodwill in their profit-sharing ratio, and the new partner does not contribute any amount towards this goodwill.
Effect on New Partner's Capital Account:
- The new partner's capital account is not debited when the existing goodwill is written-off because the new partner is not required to bring in any amount for the goodwill.
- Instead, the new partner's capital account is credited with the amount equivalent to the share of goodwill written off from the existing partners' capital accounts.
- This adjustment ensures that the new partner's capital reflects the actual value of the business without considering the goodwill that was present before the admission of the new partner.
Conclusion:
- Therefore, it is true that the new partners' capital account is not debited when the existing goodwill in books is written off at the time of admission of a new partner. This adjustment helps in maintaining the transparency and accuracy of the new partner's capital in the business.
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When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say?
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When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say?.
When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the existing goodwill in books is written-off at the time of admission of new partner, the new partners' capital account is not debited. a) True c) Partially false b) False d) Can't say?.
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