Concept:Goodwill is recorded in partnership accounts only when a definite value is paid for it, which usually happens when a new partner is admitted.
Explanation:Goodwill is not recorded merely because the business earns high profit or enjoys good customer relations.
It becomes an accounting item only when a partner brings in extra cash or benefit for the firm’s reputation.
In a partnership, the most common occasion is the admission of a new partner.
At that time, the incoming partner pays a premium for goodwill, so it is recognized in the books.
Among the given options, only admission of a new partner creates such an accounting need.
Answer:D. A new partner is admitted