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WAEC Financial Accounting 2017 Question 36

Question 36

Partnership Admission, Retirement and Dissolution

Goodwill may be brought into the books when

  1. A.no partner retires.
  2. B.assets are more than liabilities.
  3. C.profit for the period is high.
  4. D.a new partner is admitted.
Show the answer and explanation

Answer: D (a new partner is admitted.)

Explanation

Goodwill is valued and recorded when the partnership changes, e.g. on admission of a new partner.