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What is the main purpose of goodwill settlement when a partner retires from a partnership?

Answer and explanation

Correct answer: To compensate the retiring partner for his share in future profits

The retiring partner will not share future profits so he is compensated through goodwill. In exams remember goodwill as compensation for future profit share.

Related tags

AccountancyGoodwillRetirementGoodwill SettlementReconstitution Retirement Or Death Of A PartnerClass 12 Mcq

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