Valuation goodwill is 90000 ....my question is why we take 1/20 can v do by doing 1/4 to know partner share of goodwill because ratio is 1:1:1:1 so we take 1/4 or not i am confusing when take 1/20 or 1/4 some people said 1/4 doing only in distributive .... I confused help ...
Dear Student
In case of Change in PSR, For Goodwill adjustment, Gaining partners are to compensate the Sacrificing partners to the extent they are gaining, i.e Gaining Ratio = New Ratio - Old Ratio.
Therefore here gaining ratio is calculated.
Please note that here 1/4 shall not be taken for goodwill adjustment because it is not the gaining ratio, it is new ratio and from the concept, you have to take gaining ratio only.
Therefore question can only be solved by taking gaining ratio and sacrificing ratio for calculation of goodwill adjustment amounts corresponding to every partner.
Hope this helps
Keep posting
Regards
In case of Change in PSR, For Goodwill adjustment, Gaining partners are to compensate the Sacrificing partners to the extent they are gaining, i.e Gaining Ratio = New Ratio - Old Ratio.
Therefore here gaining ratio is calculated.
Please note that here 1/4 shall not be taken for goodwill adjustment because it is not the gaining ratio, it is new ratio and from the concept, you have to take gaining ratio only.
Therefore question can only be solved by taking gaining ratio and sacrificing ratio for calculation of goodwill adjustment amounts corresponding to every partner.
Hope this helps
Keep posting
Regards