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Why is directly crediting goodwill premium to Goodwill Account considered incorrect?

Answer and explanation

Correct answer: Because premium is compensation to old partners

Premium is not sale of an asset but compensation for sacrifice. It is ultimately credited to old partners.

Related tags

Common ErrorPremium AccountGoodwillGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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