Question on: JAMB Accounting - 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
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Correct Option: C
When a new partner pays Goodwill it is usually because the partnership he/she 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 on-board the new partner.
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