How to calculate adjustments of profit in treatment of goodwill at the time of reconstitution?

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How to calculate adjustments of profit in treatment of goodwill at the time of reconstitution?

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There is two type of Goodwill -

1) which is known as self generated, means as a business we earn this ourselves. According to Accounting standard 26, this is not to be recorded in books as no sale and purchase has actually taken place, meaning thereby, it's only a redistribution among partners. Therefore, after valuation, it is to be adjusted through Partners Capital accounts by debiting gaining partners and crediting sacrificing partners. Handling such Goodwill through capital Accounts also means not recording in books.

2) Other type of Goodwill is purchased one, we pay a higher price of buying a business more than it's net worth. This give rise to recording of Goodwill in books, we need to close Goodwill account by crediting it and debiting old partners. These treatment are essential at the time of reconstitution of any partnership firm - that is at the time of change in PSR, admission/retirement/ or death of any partnership.

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How to calculate adjustments of profit in treatment of goodwill at the time of reconstitution?

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