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Why is the existing goodwill account usually written off when a partner retires?

Answer and explanation

Correct answer: So its old book value can be adjusted among the old partners in their old profit-sharing ratio

Existing goodwill is an asset recorded in the books under the earlier arrangement. On reconstitution, it is usually written off by debiting the old partners' capital accounts in their old profit-sharing ratio, so the old book value is adjusted among them.

Related tags

Existing GoodwillWrite-OffRetirement Of PartnerGoodwill SettlementReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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