Question :
Which of the following statement is correct?
Option 1:
Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in sacrificing ratio.
Option 2:
Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in gaining ratio.
Option 3: Goodwill at the time of retirement of a partner is debited to remaining Partners' Capital Accounts in sacrificing ratio.
Option 4:
Goodwill at the time of retirement of a partner to the extent of retiring Partner's Share is debited to remaining Partners’ Capital Accounts in gaining ratio.
Correct Answer:
Solution : Answer = Goodwill at the time of retirement of a partner to the extent of retiring Partner's Share is debited to remaining Partners’ Capital Accounts in gaining ratio.
Goodwill at the time of retirement of a partner to the extent of the retiring Partner's Share is debited to the remaining Partners’ Capital Accounts in gaining ratio. This ensures that the goodwill is appropriately adjusted among the remaining partners based on their new profit-sharing ratios after retirement. Hence, the correct option is 4.
Accumulated losses on the retirement of a partner are
At the time of retirement of a partner, profit (gain) on revaluation will be credited to the Capital Accounts of
Question : What happens to accumulated earnings and losses when a partner retires?
Question : At the time of change in profit sharing ratio Sacrificing partner is ------ and gaining partner is ----- for the adjustment of goodwill.
An increase in the value of assets at the time of retirement of a partner is
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