goodwill

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prem (Querist)
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05 September 2010 At the time of re-constitution of partnership if firm's balance sheet contains goodwill and its value at the time of re- constitution is also given and no other information is provided what will be the treatment for this.

Srinivas Rao

Srinivas Rao (Expert)
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06 September 2010 Either
i. No treatment is required on reconstruction as capital account of sacrificing partners' capital a/c credited for the due.
or
ii. write off goodwill appearing in b/s in old ratio and adjust goodwill by debiting gaining partners' capital a/c and crediting sacrificing partners' capital a/c.