At the Time of Admission, the New Partner brings His Share of Goodwill and Capital. Old Partners Sacrifice a Share of their Profits in His Favour and Thus He Gets a Share in the Future Profits of the Firm .
Following Adjustments are needed at the Time of the Admission of a New Partner.
(i) Calculation of New Profit Sharing Ratio.
(ii) Accounting Treatment of Goodwill.
(iii) Accounting Treatment for Revaluation of Assets and Liabilities.
(iv) Accounting Treatment of Reserves and Accumulated Profits.
(v) Adjustment of Capitals on the Basis of New Profit Sharing Ratio .
