At the time of admission of a partner, the assets and liabilities may or may not be revalued depending upon whether there is any increase or decrease in their balances. However, it is necessary to value goodwill of the firm at the time of admission of a partner. We all know that the incoming partner is required to compensate the old partners for their sacrifice by way of his share of goodwill. So, it is goodwill that has to be valued.
