SUPER PROFIT METHOD

Super profit = Average profit - normal profit – partner’s Re.

Normal profit = Cap.Emp.*R/100
Goodwill = S.P. *No. of purchases year’s

CAPITALISATION METHOD

Capital employed = profit*100/Rate of Int.

Net assets = Total assets –Total liabilities
Goodwill = Cap. – Net assets

TREATMENT OF GOODWILL

Ist Case : When new partner bring share of g.w. in cash &old partner’s distributed it
privately.
No Entry.

IInd Case : When new partner bring share of g.w. in cash & g.w.money retain in the
business.
Cash A/C Dr
To new partner [ cap.+share of g.w.]

New partner A/C Dr

To old partners [ share of g.w. in S.R. ]

IIIrd Case : when new partner bring share of g.w. in cash & g.w. money withdrawn by the
old partners.
Cash A/C Dr
To new partner [cap. +share of g.w.]

New partner A/C Dr

To old partners [ share of g.w. in S.R. ]

Old partner A/C Dr

To Cash [ share of g.w. in S.R. ]

IVth Case : When new partner does not bring share of g.w. in cash & g.w. A/c be raised.
Cash A/C Dr
To new partner [ only cap. Amount ]

Goodwill A/C Dr
To old partner [ g.w.of the firm in old R.]

Vth Case: When new partner bring share off g.w. in cash & g.w. A/c be raised.
Cash A/C Dr
To new partner [ only cap. Amount ]

New partner A/C Dr

To old partners [ share of g.w. in S.R. ]

Goodwill A/C Dr
To all partners [ g.w.of the firm in new R. ]
VIth Case: When g.w. A/c be return off.
(a) Before Addmission
Old partner’s cap. A/c Dr
To Goodwill [ g.w already appear in the books in old R. ]

(b)After Addmission
All Partners Cap. A/C Dr
To Goodwill [ g.w. of the firm in N.R. ]

VII Case: When new partner does not bring share of g.w. in cash & no g.w. A/c be raised.
Cash A/C Dr
To new partner [ only cap. Amount ]

New partner A/C Dr

To old partners [ share of in S.R. ]

VIII Case : When new bring partially share of g.w. in cash & g.w. money retain in the
business.
Cash A/C Dr
To new partner [ cap. + bring share of g.w. ]

New partner A/C Dr

To old partners [ bring share of g.w. in S.R. ]

Goodwill A/C Dr
To old partners [ partically raised amt. in old R. ]