Methods of treating goodwill on admission of new partner?

When a new partner is admitted to a partnership, goodwill can be treated in several ways. One common method is to recognize and value the existing goodwill of the partnership and adjust the capital accounts of the existing partners accordingly, reflecting the new partner's share. Alternatively, the new partner may buy into the partnership by paying a premium for goodwill, which is then distributed among the existing partners based on their profit-sharing ratio. Lastly, goodwill may also be left unrecorded in the books, with the understanding that it exists but is not formally recognized.