On admission of a new partner, goodwill amount may be determined on what basis?

Correct answer: Firm's agreement and valuation method

The direct answer is A: the firm’s agreement and the accepted valuation method. Goodwill reflects reputation and future earning power, so its amount is not found from one simple item such as bank balance. Partners may agree to use methods such as average profit, super profit, capitalization, or another appropriate method, according to the partnership agreement and accounting rules. Option A is correct because it includes both agreement and valuation method. Option B, only bank balance, ignores reputation and earning capacity. Option C, only cash sales, is too narrow; sales alone do not show the whole goodwill value. Option D, partners’ age, has no direct accounting basis for measuring goodwill. The exact method should be stated or agreed; this prevents disputes when a new partner enters. Memory cue: goodwill is measured by an agreed method, not by one unrelated figure.