In a partnership firm, when there is a change in profit-sharing ratio among existing partners, goodwill adjustment is necessary to ensure fair compensation for the partners who sacrifice their share of profits. The partners who gain should compensate the sacrificing partners based on the agreed goodwill value. The calculation involves determining the sacrificing and gaining ratios and then adjusting the goodwill accordingly. If a partner gains in the new ratio, they must pay their share to the sacrificing partner in proportion to their loss. Such adjustments are either made through the partner’s capital accounts or by directly paying the sacrificing partner in cash.