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P1 C5 ADMISSION OF A PARNER — Elements of Account STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceElements of AccountP1 C5 ADMISSION OF A PARNER1 Mark
Question
What is premium for goodwill?
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Answer

At the time of admission of a new partner, old partners sacrifices some of their profit share in favour of the new partner. To compensate profit share acquired by the new partner he is required to give his share of goodwill to the firm which is known as premium for goodwill.

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