On a partner’s death, how are goodwill and the deceased partner’s share of profit up to the date of death generally recorded in the partner’s capital or current account?

Correct answer: Both are credited as separate items in the account

The deceased partner is entitled to both his or her share of goodwill and the estimated share of profit earned up to the date of death. Therefore, the partner’s capital or current account is credited with these two items separately. Goodwill represents the value of the partner’s share in the firm’s reputation, whereas profit up to the date of death represents the partner’s share of earnings for that period; they are not the same item. Exam tip: While preparing the deceased partner’s account, identify goodwill, profit up to the date of death, and other adjustments separately.