O-LevelAccountingAccounting principles and policies7707/11 · May/June 2017 · Q201 Mark
Gurmit agreed to admit Balbir as a partner from 1 January 2017. A value of $4000 was agreed as goodwill of Gurmit's business. Why was the goodwill of Gurmit's business valued before admitting Balbir as a partner?
Ato recognise that Gurmit's business has built up a good reputation
Bto recognise that Gurmit should have the largest share of profit
Cto recognise that Gurmit should receive a partnership salary
Dto recognise that Gurmit will have the largest capital
✓ Correct answer
A: to recognise that Gurmit's business has built up a good reputation
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