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Question 5

If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?

Answer

If some goodwill already exists in the books of old firm, then it should be written off among the old partner's itself in their old profit sharing raito. Following journal entry shall be passed for this:

Old Partner's Capital Account                          Dr.

             To Goodwill Account

(Goodwill Written off in old ratio among the old partners)

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