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:
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.
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.
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