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Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s capital account.
Reason (R): The adjustment will reduce the capital of the partner.

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Assertion (A) is true, but Reason (R) is false

Assertion (A) is false, but Reason (R) is true

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Both Assertion (A) and Reason (R) is not the correct explanation of Assertion (A).

answer is C.

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Detailed Solution

If goodwill not brought in cash, it can be adjusted through the new partner's capital account or current account as the case may be.

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