Partnership Goodwill
System
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i cannot grasp hold of the goodwill conecpt within unit 5 when a new partner is introduced to a partnership. Can anybody help me?<BR>i am in need of help with what entries are required and why it is these journal entries that need to be made. anyones input on this subject would be much appreciated. <BR>Thanks<BR><BR>Laura <BR>x<BR>
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Partnership Goodwill
This might help, then again it might not!!<BR><BR>I think as Goodwill as a charge!!<BR><BR>All charges are Debits!!<BR><BR>So Debit goodwill T account with the agreed goodwill amount. Then you need to do a credit (to ensure the double entry!) So Credit each partners account with the profit ratio and credit the capital accounts. (pretend its profit your are sharing!)<BR><BR>Then you have an amount in Goodwill so you need to clear this out! So as its a debit balance - <BR>Credit Goodwill to clear the account. Then you must do a debit entry to do the double entry. So now you debit the capital accounts with the new profit sharing ratio or new partners share.<BR><BR>I think you will find that the partner thats increased there ratio has been charged for this - ie there capital has been reduced!<BR><BR>Hope this helps,, if you e-mail me!<BR><BR>Amanda_aat@btinternet.com<BR>MSN Group Manager0 -
Partnership Goodwill
Just want to say that the Goddwill is an intangible fixed asset and assets will be in the debit side.<BR><BR>Sorry I'm not talking here about the partnership but generally <BR><BR>hope this help0 -
Partnership Goodwill
Thankyou, that has really helped me but just one more thing i'm confused with is when Dr the Goodwill A/c and Cr the Capital A/c's you said that you need to Cr the Current A/c's aswell i was just wondered where the other Dr entry is for the current a/c's? or is it 2 Cr's to one Dr? <BR><BR>Thanks<BR>Laura<BR>x0