A new partner instead of bringing his share of goodwill in cash brough

1.	A new partner instead of bringing his share of goodwill in cash brought the same as assets. How will you treat it?
Answer» When an incoming partner brings his share of goodwill in kind (as assets), the assets account will be debited. Credit is given to premium for good will account with the share of goodwill and new partner’s capital account with the share of capital. The journal entries here are: 1. Assets a/c Dr. To New partner’s Capital A/c To Premium (goodwill) A/c (Assets brought in by the new Partner) 2. New partners’ capital a/c Dr. To Sacrificing partners Capital A/c (Share of goodwill brought in by the new partner transferred to old partners capital).

A new partner instead of bringing his share of goodwill in cash brought the same as assets. How will you treat it?

Answer»

When an incoming partner brings his share of goodwill in kind (as assets), the assets account will be debited. Credit is given to premium for good will account with the share of goodwill and new partner’s capital account with the share of capital.

The journal entries here are:

1. Assets a/c Dr.

To New partner’s Capital A/c

To Premium (goodwill) A/c (Assets brought in by the new Partner)

2. New partners’ capital a/c Dr.

To Sacrificing partners Capital A/c (Share of goodwill brought in by the new partner transferred to old partners capital).

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