ADMISSION OF PARTNERS, GOODWILL AND REVALUATION OF ASSETS : LSUS
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 an old established business as a result of its good name, efficient management good connection, good location, etc which make it earn more profit.
REASONS FOR PAYMENT FOR GOODWILL
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- Chapters 7
- Category SSS3
- Author ClassNotes Edu
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