Admission of a new partner, Financial Accounting

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.

Posted Date: 12/11/2012 6:12:16 AM | Location : United States







Related Discussions:- Admission of a new partner, Assignment Help, Ask Question on Admission of a new partner, Get Answer, Expert's Help, Admission of a new partner Discussions

Write discussion on Admission of a new partner
Your posts are moderated
Related Questions
Q. What do you mean by Operating Agreement? Operating Agreement - Agreement, generally a written document which sets out the rules by which a LIMITED LIABILITY COMPANY (LLC) is

Identify the various prices for job To identify the various prices for job, there are numerous points to be considered, including: ?How many garages shall we visit? ?What

assets&what are the different type of asset


Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investm

A lawn care company started business on January 1, 2012. The company billed clients $105,000 for lawn care services completed in 2012. By December 31, the company had received $84,

APPORTIONMENT (a) T he purpose of the apportionment rules The purpose of the various rules of apportionment is to provide a fair and reasonable basis for dividing certain

The following costs were incurred in 2010 in the design and construction of a new office building over a nine-month period during 2010: Requirement Calculate the amount

Determine out the future value of Rs.1000 compounded yearly for 10 years at an interest rate of 10 percent. Solution: The future value 10 years thus would be FV = PV (1+k)

The following information is available for Mehring Corporation for the year ended December 31, 2012: Collection of principal on long-term loan to a supplier