1.4.1 - I. Admission of a Partner
Enroll to start learning
You’ve not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Practice Questions
Test your understanding with targeted questions
What is the primary reason for admitting a new partner?
💡 Hint: Think about what businesses need for growth.
What term describes the portion of an existing partner’s share that is given up for the new partner?
💡 Hint: It's a ratio that shows what old partners sacrifice.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is the first step when admitting a new partner?
💡 Hint: Consider the order in which financial agreements are made.
True or False: Goodwill should never be accounted for when admitting a new partner.
💡 Hint: Think about the importance of business reputation.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A partnership firm consisting of three partners (X, Y, Z) has a profit-sharing ratio of 5:3:2. A new partner W is to be admitted, who is willing to pay a goodwill of 20,000. If the new ratio after admission is 4:3:2:1, calculate the sacrificing ratio for each partner, and how much goodwill each will receive.
💡 Hint: Focus on calculating each partner's change in share ratio.
Consider a partnership where Partner A wants to retire, and a new Partner B will take their place. How would the goodwill be handled in this situation if Partner A has a significant reputation? Discuss the accounting treatment.
💡 Hint: Look at how Partner A's contributions relate to the overall business value.
Get performance evaluation
Reference links
Supplementary resources to enhance your learning experience.