| Assertion (A) : |
| At the time of reconstitution of partnership firm, goodwill is not recognized in the books of accounts of the firm because consideration in money or money's worth is not paid for it. |
| Reason (R) : |
| Goodwill can be calculated by using average profit method, super profit method or capitalization method. After that an adjustment entry is passed for goodwill share, by debiting the gainer partner's capital/current account and by crediting the sacrificing partner's capital/current account. |
| Choose the Correct Option from the following: |
A) Assertion and Reason both are correct and Reason is the correct explanation of assertion
B) Assertion and Reason both are correct but Reason is not correct explanation of assertion
C) Both Assertion and Reason are not correct
D) Only Assertion is correct
Correct Answer: B
Solution :
Assertion and Reason both are correct but Reason is not correct explanation of assertion
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