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Subjects

Accountancy

Goodwill Accounting

Goodwill Accounting in Class 12 Accountancy explains how a firm records and adjusts the value of its reputation when a new partner is admitted. Students learn why the incoming partner compensates the old partners, how goodwill is valued using average profit, super profit, or capitalization methods, and how the amount is treated when it is brought in cash, retained in the business, withdrawn, or not brought at all. The topic also covers sacrificing ratio, hidden goodwill, and the journal entries required under different admission situations.

Expert · Level 6 · 2 questions

Practice questions

01A and B share in (19:11). C is admitted for (1/5) share and takes the whole share only from A. What will be the new profit sharing ratio?

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Answer and explanation

02A B and C's new ratio is (13:11:6) and C's whole share came from A. C's required goodwill is ₹72000. Who will be credited?

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