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Why is the amount brought in excess of required goodwill adjusted in the new partner's capital account?

Answer and explanation

Correct answer: Because it is more than compensation for sacrifice

Old partners are entitled only to required goodwill. The excess amount is treated as the new partner's own amount.

Related tags

Excess GoodwillAccounting TreatmentReasoningGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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