Admission of a new partner, Financial Accounting

Assignment Help:

Admission of a new partner

When a new partner joins the firm/partnership, the new partner will enjoy the benefits arising as a result of goodwill created by the old existing partners.  This is because; the new partner will get his share of profits which he may not have received had he decided to start a new business.

It is thus fair that the new partner pays into the firm not only his capital contribution but also his share of the goodwill.

In some situations, the new partner will pay cost directly for his share of goodwill while in most cases, goodwill will be deducted from his total contributions to the business. However, the new partner pays in cash or not for his share of goodwill, the following entries are normally passed in the partners current accounts.


Related Discussions:- Admission of a new partner

Product costs and which are period costs, The costs that follow were extrac...

The costs that follow were extracted from the accounting records of various different manufacturers: 1.    Weekly wages of an equipment maintenance worker 2.    Marketing costs

Define the term limited company- business ownership, Define the term Limite...

Define the term Limited company- business ownership Limited companies can range in size from quite small to very large. Number of individuals who subscribe capital and become

Determine balance sheet, Determine balance sheet: Income Statements ...

Determine balance sheet: Income Statements Year Ended December 31, 20X8   Insure Co. Go-med Co. Sales $3,900,000

The rectification entries, Show the rectification entries for the following...

Show the rectification entries for the following:                                        (10 marks) a.    The Sales account is undercast by Rs.15,000 b.    Goods returned by

Stock rights, Stock Rights - Stock rights are rights issued to stockholders...

Stock Rights - Stock rights are rights issued to stockholders of a CORPORATION which entitle them to purchase new shares of stock in the corporation for a stated price that is freq

How useful is accounting information, How useful is accounting information?...

How useful is accounting information? No one would seriously claim that accounting information fully meets all of the needs of every various user groups. Accounting is still a

Explain the rules of debits and credits, A classmate is considering droppin...

A classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits and credits. Explain the rules of debits and credits in a wa

Compute the effect on retail sales, Molina Medical Supply Company is trying...

Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina's business segments.

What is completion report, Q. What is Completion Report? The object of a ...

Q. What is Completion Report? The object of a completion report is to compare the cost of work actually constructed with those provided for in the last sanctioned estimate. A com

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd