ADMISSION OF PARTNERS, GOODWILL AND REVALUATION OF ASSETS

FINANCIAL ACCOUNTING SSS3 FIRST TERM        

WEEK 3 &4

ADMISSION OF PARTNERS, GOODWILL AND REVALUATION OF ASSETS

Contents

ADMISSION OF NEW PARTNERS

This occurs when a new partner is admitted into an existing partnership business. The reasons for such admission usually are: the expiration of an old partnership agreement, to inject in more funds, bringing in a specialist, the death of an old partner, etc.

However, it will be unfair to the existing partners for a new person to come in and take part in the established prosperous business without any reward to the old partners. This compensation to the old partners is goodwill.

GOODWILL ON ADMISSION OF A PARTNER

Definition of Goodwill: Goodwill is the benefit and advantage attached to…