goodwill

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If Goodwill does not appears in the books (self Generated Goodwill), and there is a admission of new partner for 1 by 4th share of profit. He brings nothing as the premium. Now old partners decide to show g/w in the books. Entry for this will be:

                 G/W A/c   Dr.    10000 (say)

                           To A's capital a/c     6000

                            To B's capital a/c     4000

  Now I want to ask why the incoming partner is not debited for his liability . If in this case g/w would be written off , in that case the capital a/c of incoming partner would have been debited . Then why not in this case?

Replies (1)

Dear here in your question as per my opinion old partners are getting benifit & not the liability. Similarly New partner has not came with any premium that is why his capital account has not been credited. But the day he joins the firm he is also liable for all firms duesso any reduction in the goodwill will be debited in his capital account.

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