Who gets the most direct benefit from goodwill on retirement?

Correct answer: Retiring or deceased partner

The direct answer is A: the retiring or deceased partner gets the most direct benefit from goodwill. Goodwill is the value of a firm's reputation, customer loyalty and other advantages that help it earn extra profit. When a partner retires or dies, the continuing partners usually gain the benefit of the outgoing partner's share of future goodwill. To settle this right, the outgoing partner's share of goodwill is credited to the retiring or deceased partner's capital or current account and included in the amount payable. Option A is correct because it identifies the person whose goodwill entitlement must be settled. Option B is wrong because the bank is only a financial institution and does not automatically receive this goodwill amount. Option C is wrong because customers may benefit indirectly from a good business, but they are not credited with the partner's share. Option D is wrong because the government is not the recipient of this partnership adjustment. Memory cue: on retirement, honour the outgoing partner's goodwill share.