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Goodwill entries

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Goodwill entries
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Khushi Varshney 4 years ago

Treatment of existing Goodwill appearing in the Balance Sheet: Journal entry: Old Partners’ Capital/Current a/c………………Dr. (In Old profit sharing ratio) To Goodwill a/c (Being the existing goodwill is written off) Method1: When goodwill is adjusted through partners’ capital /current accounts Journal Entry: Gaining partners Capital/ Current a/c………Dr. (In Gaining Ratio) To Sacrificing Partners 'Capital /Current a/c (In Sacrificing Ratio) (Being the compensation of gaining partners to Sacrificing partners) Method2: When Goodwill is raised and Written off Goodwill a/c…………………………….Dr. (Full revised value of Goodwill) To Old Partners’ Capital/ Current a/c (In old Profit sharing ratio) (Being the goodwill raised and credited to Partners Capital accounts in old profit sharing ratio) All Partners Capital/ Current a/c .................. Dr. (In new profit sharing ratio) (Including Incoming or new partner) To Goodwill a/c (With value of Goodwill) (Being the goodwill debited to Partners Capital accounts in New profit sharing ratio)
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