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Beginning of January 2017, they invited their friend D to their business by investing $410,000 which 10,000 for the goodwill of 1/6 part of the share for the asset for future business. Goodwill is not to be maintained in the financial statements. D has decided to receive $1,000 salary per month and the remaining previous agreement is valid since a new partner has joined to business.
I am quite confused in this question. What does goodwill do, and How will these information affects the partnership (SP/L, SOFP statement/capital account/current account/ appropriation account)?
Goodwill in a partnership is covered on p122 of our FA2 notes.
10,000 seems to be 1/6 of the goodwill, so it must be 60,000 in total.
The net goodwill adjustment is to Cr 60,000 to the old partners in their old profit sharing ratio then Dr 60,000 to the new partners in their new PSR.
Goodwill in a partnership is covered on p122 of our FA2 notes.
10,000 seems to be 1/6 of the goodwill, so it must be 60,000 in total.
The net goodwill adjustment is to Cr 60,000 to the old partners in their old profit sharing ratio then Dr 60,000 to the new partners in their new PSR.
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