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Question
Write a short note on the accounting treatment of goodwill.
Solution
1. For the goodwill brought in cash credited to old partner’s capital account
| Date | Particulars | L.F. | Debit (₹) |
Credit (₹) |
| Cash/Bank A/c ........Dr. To old partner's capital/current A/c (in sacrificing ratio) |
xxx - |
- xxx |
2. For the goodwill brought in kind (in the form of asset) credited to old partner’s capital account
| Date | Particulars | L.F. | Debit (₹) |
Credit (₹) |
| Respective Assets A/c ........Dr. To old partner's capital/current A/c (in sacrificing ratio) |
xxx - |
- xxx |
3. For withdrawal of cash received for goodwill by the old partners
| Date | Particulars | L.F. | Debit (₹) |
Credit (₹) |
| Old partner's capital/current A/c ..........Dr. To Cash/Bank A/c |
xxx - |
- xxx |
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