Concept:Goodwill is recorded in partnership accounts when the profit-sharing ratio changes, commonly on the admission of a new partner.
Explanation:When a new partner is admitted, the old partners sacrifice a part of their future profit share.
To compensate them for this sacrifice, the value of goodwill is brought into the books.
The new partner is asked to bring in their share of goodwill, which is then credited to the old partners in their sacrificing ratio.
Making a huge profit or having a large bank balance does not require goodwill to be recorded.
A dormant partner also does not create the need for goodwill recognition.
Answer:D. a new partner is admitted