If a new partner does not bring his share of goodwill in cash, which of the following adjustment treatments must be carried out?
- ACrediting old partners' capital A/c in new ratio and debiting new partner capital A/c
- BCrediting old partners' capital A/c in sacrificing ratio and debiting new partner's current A/c
- CCrediting all partners in the new ratio and debiting premium account
- DNo entry is made when new partner does not bring his share of goodwill in cash
Solution & Step-by-step Explanation
When a new partner is unable to bring his premium for goodwill in cash, his Current Account (or sometimes Capital Account under specific older frameworks) is debited for his share of goodwill, and the sacrificing partners' Capital Accounts are credited in their sacrificing ratio. This ensures compliance with AS-26 guidelines.