Why should a new partner contribute towards goodwill on his admission?
FINANCIAL
JAMB 2018
Why should a new partner contribute towards goodwill on his admission?
- A. It is a norm
- B. to ensure new partner also have a stake in the business
- C. the firm into which he is entering already has some goodwill in the market
- D. to purchase the business
Correct Answer: C. the firm into which he is entering already has some goodwill in the market
Explanation
Goodwill is being paid by a new partner because the partnership he is entering into already has goodwill in the market as well as to pay for the portion sacrificed by existing partners in form to their profit to admit the new partner
Post an Explanation Or Report an Error
If you see any wrong question or answer, please leave a comment below and we'll take a look. If you doubt why the selected answer is correct or need additional more details? Please drop a comment or Contact us directly. Your email address will not be published. Required fields are marked *