AS 10 what is the approprate form of dealing in the admission of partner

Dear Friends,

 

 

Greeting

 

I am asking a silly question but i want the clarity beacuse the thing is confusing me a lot. According to updated AS 10 what is the approprate form of dealing in the admission of partner :

 

Let say 1000 Rs is for goodwill he bought and 10000 for capital

 

What entry we will do

 

 

Cash  Dr.           11000

To  New PArtner Cap A/c         10000

To PRemium          10000

 

 

Premium A/c 1000

To Old PArtners   1000

 

 

 

OR

 

Cash  11000

To New PArtner A/c 11000

 

 

NEw PArtner A/c 1000

To old partner A/c 1000

 

 

 

Please guide as my friends has confused me regardign the same

Replies (4)

Goodwill, in general, is recorded in the books only when some

consideration in money or money’s worth has been paid for it. Whenever a

business is acquired for a price (payable either in cash or in shares or

otherwise) which is in excess of the value of the net assets of the business

taken over, the excess is termed as ‘goodwill’. Goodwill arises from business

connections, trade name or reputation of an enterprise or from other intangible

benefits enjoyed by an enterprise

This one is right--

Cash  11000

To New Partner A/c 11000

 

 

New Partner A/c 1000

     To old partner A/c 1000

( This entry is based upon assumption that all old partners are sacrificing)

 

The explanation part is very well done by Jazz as given in above reply.

 

The above goodwill is just valuation. In other words its self generated and not purchased.

Raise goodwill only if it is required by the question, unless pass the second entry

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