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.