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Question: Which of these statements is true?

Options:

  1. Goodwill at the time of retirement of a partner is credited to remaining partner's capital A/c in sacrificing ratio.
  2. Goodwill at the time retirement of a partner is credited to remaining partner's capital A/c in gaining ratio.
  3. Goodwill at the time of retirement of a partner is debited to remaining partner's capital A/c in sacrificing ratio.
  4. Goodwill at the time of retirement of a partner to the extent of retiring partner's share is debited to remaining partner's capital A/c in gaining ratio.

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Correct statement is

"4. Goodwill at the time of retirement of a partner to the extent of retiring partner's share is debited to remaining partner's capital A/c in gaining ratio."

out of all above statements.


More info:

Goodwill at the time of retirement of a partner to the extent of retiring partner's share is debited to remaining partner's capital A/c in gaining ratio.

The amount of goodwill is measured by subtracting the amount paid for assets from their fair market value on the purchase date.

The amount of goodwill is recorded as an asset.

Recording impairment of goodwill reduces the amount of net income.

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