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The amount of goodwill brought in by the new partner is shared by the ____ partners in their ____ ratio
- a)All old partners in old ratio
- b)Sacrificing partners, sacrificing
- c)Gaining partner, gaining
- d)All partners (including new) in new ratio
Correct answer is option 'B'. Can you explain this answer?
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The amount of goodwill brought in by the new partner is shared by the ...
The amount of premium for goodwill brought in by the new partner will be shared by the only sacrificing partners in their sacrificing ratio.
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The amount of goodwill brought in by the new partner is shared by the ...
Partnership and Goodwill
Partnership is a business relationship between two or more people who agree to share profits and losses. When a new partner joins an existing partnership, the value of the business may increase due to the new partner's skills, experience, and capital. This increase in value is called goodwill.
Sharing of Goodwill
The amount of goodwill brought in by the new partner is shared by the sacrificing partners and gaining partner in their gaining ratio. This means that the old partners who are sacrificing a part of their share of profits to make room for the new partner will share the goodwill with the new partner in proportion to their new profit-sharing ratio.
For example, if there were two old partners A and B with a profit-sharing ratio of 3:2, and C joins the partnership with a capital of Rs. 50,000, bringing in a goodwill of Rs. 30,000, the new profit-sharing ratio could be 5:3:2. In this case, A and B are the sacrificing partners who will share the goodwill with the gaining partner C in their gaining ratio of 3:1.
Conclusion
In conclusion, the amount of goodwill brought in by a new partner is shared between the sacrificing and gaining partners in their gaining ratio. This ensures that the new partner's contribution to the increase in the value of the business is appropriately recognized and rewarded, while the existing partners are compensated for the reduction in their share of profits.
Partnership is a business relationship between two or more people who agree to share profits and losses. When a new partner joins an existing partnership, the value of the business may increase due to the new partner's skills, experience, and capital. This increase in value is called goodwill.
Sharing of Goodwill
The amount of goodwill brought in by the new partner is shared by the sacrificing partners and gaining partner in their gaining ratio. This means that the old partners who are sacrificing a part of their share of profits to make room for the new partner will share the goodwill with the new partner in proportion to their new profit-sharing ratio.
For example, if there were two old partners A and B with a profit-sharing ratio of 3:2, and C joins the partnership with a capital of Rs. 50,000, bringing in a goodwill of Rs. 30,000, the new profit-sharing ratio could be 5:3:2. In this case, A and B are the sacrificing partners who will share the goodwill with the gaining partner C in their gaining ratio of 3:1.
Conclusion
In conclusion, the amount of goodwill brought in by a new partner is shared between the sacrificing and gaining partners in their gaining ratio. This ensures that the new partner's contribution to the increase in the value of the business is appropriately recognized and rewarded, while the existing partners are compensated for the reduction in their share of profits.
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The amount of goodwill brought in by the new partner is shared by the ...
But the sacrifice is calculated after distribution of goodwill right?
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The amount of goodwill brought in by the new partner is shared by the ____ partners in their ____ ratioa)All old partners in old ratiob)Sacrificing partners, sacrificingc)Gaining partner, gainingd)All partners (including new) in new ratioCorrect answer is option 'B'. Can you explain this answer?
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