Goodwill in partnership

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18 Points Posted on 24 July 2020
what is the exact logic behind the raising and writing off of goodwill during admission of a partner in a partnership firm
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On 24 July 2020 at 19:22 Report
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When a new partner joins a partnership, goodwill is raised to acknowledge the value created by the existing partners' past efforts. This goodwill is then credited to the old partners. As self-created goodwill is an intangible asset not shown on the balance sheet, it is subsequently written off.

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Tax and Business Consultant
11616 Points Posted on 24 July 2020
Goodwill is a result of the past efforts of the all old partners. To know the true value of business, created by all old partner n give the credit of the same to old partner Goodwill is calculated at time of admission n credited to old partner.
And as Goodwill is self created intangible assets, which can't be shown in balance sheet it's written off thereafter.
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On 24 July 2020 at 20:14
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18 Points Posted on 24 July 2020
Thank you so much sir for your answer.
It helped me a lot
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On 24 July 2020 at 20:16
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Tax and Business Consultant
11616 Points Posted on 24 July 2020
You'r most welcome, sir
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On 24 July 2020 at 20:18

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