Question

What is the need for the valuation of goodwill?

Options

• Change in the profit-sharing ratio amongst the existing partners.

• Admission of the new partner.

• Retirement of a partner & Death of a partner.

• All of the above

Answer 1

All of the above

Explanation:

Typically, the need for goodwill valuation emerges when a business is sold. However, it may occur in the following circumstances in the context of a partnership firm:

1. Changes in profit-sharing percentages among existing partners.
2. The new partner is accepted.
3. A partner has retired.
4. a partner's death; and
5. Dissolution of a business that includes the selling of the company as a continuing concern.
6. Partnership firms are merged.