Effect of Admission of new partner
Admission of new partner has following implications in Partnership Accounting:
New & Sacrificing Ratio
Share of Goodwill
Revaluation of Assets and Liabilities
Accumulated Profits and Losses
Guiding principle is new partner should not get past earned profit. Hence existing partners share accumulated profit or loss till date. Profit includes not only Reserves but also appreciation or reduction in the value of assets. Goodwill or Reputation is also valued and shared with existing partners.