In the entry for writing off old goodwill, on which side does the Goodwill Account appear?

Correct answer: Credit

Writing off old goodwill means removing the existing goodwill asset from the firm’s books. Goodwill normally has a debit balance because it is an asset. To cancel or remove a debit-balance asset, the Goodwill Account must be credited. The corresponding entry is: Old Partners’ Capital or Current Accounts Dr. To Goodwill Account. The old partners are debited in their old profit-sharing ratio because the recorded goodwill belonged to the period in which they were entitled to the profits. Therefore, option A is correct. Debit is used for the partners’ accounts in this entry, not for the Goodwill Account itself.