Accounting (AS)·Partnerships · NSSCAS 2.2.1
Goodwill & admission of a new partner
Narrated lesson · press play
When a new partner joins a firm, the old partners must be paid for something invisible they built over years: goodwill. In this lesson you learn what goodwill really is, and the exact ledger entries for creating goodwill, writing it off, and revaluing assets on admission. This is a favourite Paper 1 structured question, and the whole trick is knowing which ratio to use at which step.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 2.2.1):
- explain the meaning of the term goodwill
- prepare the accounting entries for goodwill and revaluation on admission of a new partner
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