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Goodwill delivered by an incoming partner is still distributed among older colleagues in theirs –

5. Goodwill delivered by an incoming partner is still distributed among older colleagues in theirs:

1. Old profit-sharing ratio
2. New profit-sharing ratio
3. Gaining ratio
4. Sacrificing ratio

Answer: D) Sacrificing ratio

Explanation:

In the case of a partner's acceptance, goodwill will not be raised in the firm's books for financial or financial reasons; the amount is paid for it. If an incoming partner brings any premium in addition to his or her major contribution at the time of his or her admission, that premium should be allocated to other existing partners. When a new partner is accepted into the company, the old partner usually sacrifices to reap the new partner at a lower rate of future profit sharing. Therefore, the interest payment brought by the new partner will be given to existing partners on the basis of the profit sacrificing ratio.