Need for valuation of goodwill of partnership firms

Need for valuation of goodwill of partnership firms

In case of partnership firms, whenever there is a change in the mutual rights of partners, the need for valuation of goodwill arises. Following are the circumstances that require valuation of goodwill of partnership firms in order to protect the rights of the partners:

i.            When there is a change in the profit sharing ratio

ii.            When a new partner is admitted into a firm

iii.            When an existing partner retires from the firm or when a partner dies

iv.            When a partnership firm is dissolved