Goodwill is taken into account in partnership business when

Accounts - Principles of Accounts

JAMB 2024

A. the business is being dissolved
B. the business has good customer relations
C. a new partner is admitted
D. when the business is making huge profit

Your School's Whatsapp Group - Join Us now

WAEC and NECO CBT App for Mobile Devices - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now

Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts

Correct Answer: Option C

Explanation

When a new partner joins the existing partnership, they bring in capital or expertise. The existing goodwill of th business (positive reputation, customer base, etc.) might justify paying the existing partners a premium above the book value of their capital investment. This premium is recorded as goodwill.

Previous Next

Go back to Acc classroom

Report an Error Ask A Question Download App