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When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio?
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When goodwill account is raised at the time of admission of a new part...
Answer:
Credit to Old Partner
When a new partner is admitted to a partnership firm, goodwill account is raised and credit is given to the old partners in their old profit sharing ratio.
Explanation
Goodwill is an intangible asset that represents the reputation, brand value, customer base, and other non-physical assets of a business. When a new partner is admitted to a partnership firm, the value of the firm increases due to the addition of new skills, expertise, and resources. This increase in value is reflected in the goodwill account of the firm.
The old partners of the firm have contributed to the goodwill of the firm through their hard work, dedication, and reputation. Therefore, they are entitled to a share in the goodwill account when a new partner is admitted. The amount of credit given to the old partners is based on their old profit sharing ratio.
For example, if A and B are partners in a firm with a profit-sharing ratio of 2:1 and they admit C as a new partner with a 1/3 share in profits, the goodwill account will be raised and credited to A and B in their old profit-sharing ratio of 2:1.
Conclusion
In conclusion, when a new partner is admitted to a partnership firm, goodwill account is raised and credit is given to the old partners in their old profit sharing ratio. This is done to recognize the contribution of the old partners to the goodwill of the firm and to ensure that they are compensated for the increase in the value of the firm due to the admission of a new partner.
Credit to Old Partner
When a new partner is admitted to a partnership firm, goodwill account is raised and credit is given to the old partners in their old profit sharing ratio.
Explanation
Goodwill is an intangible asset that represents the reputation, brand value, customer base, and other non-physical assets of a business. When a new partner is admitted to a partnership firm, the value of the firm increases due to the addition of new skills, expertise, and resources. This increase in value is reflected in the goodwill account of the firm.
The old partners of the firm have contributed to the goodwill of the firm through their hard work, dedication, and reputation. Therefore, they are entitled to a share in the goodwill account when a new partner is admitted. The amount of credit given to the old partners is based on their old profit sharing ratio.
For example, if A and B are partners in a firm with a profit-sharing ratio of 2:1 and they admit C as a new partner with a 1/3 share in profits, the goodwill account will be raised and credited to A and B in their old profit-sharing ratio of 2:1.
Conclusion
In conclusion, when a new partner is admitted to a partnership firm, goodwill account is raised and credit is given to the old partners in their old profit sharing ratio. This is done to recognize the contribution of the old partners to the goodwill of the firm and to ensure that they are compensated for the increase in the value of the firm due to the admission of a new partner.
Community Answer
When goodwill account is raised at the time of admission of a new part...
It is originally to be distributed in sacrificing ratio. To find sacrificing rati(SR) SR=old ratio-new ratio. SR is to be found only when the NPSR(New profit sharing ratio) is given. if NPSR is not give then the old ratio is considered as the SR...^_^
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When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio?
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When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio?.
When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When goodwill account is raised at the time of admission of a new partner, credit is given to old partner in their? A) new profit sharing ratio B) old profit sharing ratio C) sacrifice ratio?.
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