On retirement of a partner, the retiring partner's capital account will be credited with:
This question was previously asked in
Shift 16/06/2023 3:30 PM - 6:30 PM
A
His/her share of goodwill
B
Goodwill (valued) of the firm
C
Share of goodwill of remaining partners
D
Existing goodwill of the firm
Correct Answer
His/her share of goodwill
Detailed Explanation
On the retirement of a partner, the retiring partner's capital account will be credited with "His/her share of goodwill."
This is because the retiring partner is entitled to their portion of the firm's goodwill as per the partnership agreement or as determined during the retirement process. Goodwill is considered an asset of the firm, and the retiring partner's share of it is credited to their capital account upon retirement.
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