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to share the remaining profits in the same ratio in which they were sharing
before the admission of a new partner.

2. The new partner “purchases” his share of profit from the old partners
equally. In such cases the new profit sharing ratios of the old partners will be
as certained by deducting the sacrifice made by them from their existing share
of profits.

New Profit Ratio = Old Ratio - Sacrifice

3. The new partner “purchases” his share of profit from the old partners in
particular ratio. In such cases the new profit sharing ratio of the old partners

will be calculated after deducting the sacrifice made by a partner from his
existing share of profit.

New Profit Ratio = Old Ratio - Sacrifice

4. When the old partners surrender a particular fraction of their share in
favour of the new
Partner then.,

Surrendering Share = Surrendered Share X Old Ratio.
New Ratio = Old Ratio - Surrendering Share.
Sacrifice Ratio = Old Ratio - New Ratio.
Accounting Treatment of Goodwill on the Admission of a

Partner :

1. When the amount of goodwill (premium) is paid privately.

:- No Entry

2. When the new partner brings his share of goodwill (premium) in cash:

a.) When the amount of goodwill/ premium brought in by the new partner is
retained in the business:-

i.) Cash/ Bank A/c Dr.
To Pre for goodwill A/c