When a new partner is admitted into a partnership and the old partners' goodwill is recognized,the goodwill is allocated to:
I.all the partners in their profit-and-loss-sharing ratio.
II.the old partners in their profit and loss sharing ratio.
A)I only
B)II only
C)Either I or II
D)Neither I nor II

Question

Quizplus · Accepted Answer

Goodwill is a result of the efforts of the old partners, hence it is only allocated to them in their profit and loss sharing ratio. The new partner does not contribute to the goodwill of the partnership before their admission. Therefore, option I is incorrect in this case.

When a New Partner Is Admitted into a Partnership and the Old