Valuation of goodwill is not done in which of the following case?

Goodwill valuation is required only when there are changes in the partnership structure or when partners' rights and interests in the firm are altered.

Let's examine each case:

Change in profit sharing ratio - When existing partners alter their profit sharing arrangement, one partner gains while another sacrifices. The sacrificing partner must be compensated for giving up their share in future super profits (goodwill). Hence, goodwill valuation is necessary.

Admission of a new partner - A new partner acquires a share in the firm's accumulated goodwill that was built by the existing partners. The incoming partner must compensate old partners for this benefit, requiring goodwill valuation.

Retirement of a partner - The retiring partner has contributed to building the firm's goodwill and deserves compensation for their share. Goodwill must be valued to calculate the amount payable to the outgoing partner.

Purchasing of raw material - This is a normal business transaction involving the firm's day-to-day operations. It does not involve any change in partnership composition, profit sharing rights, or redistribution of interests among partners.

Goodwill represents the value of a firm's reputation and earning capacity above normal. Its valuation becomes relevant only when partners' stakes in the business are being redistributed. Routine trading activities like purchasing raw materials, selling goods, or paying expenses are recorded through simple journal entries and do not require goodwill calculations.