Question

A and B are partners with the capital Rs.50,000 and Rs.40,000 respectively.They share profits and losses equally. C is admitted on bringing Rs.50,000 as capital only and nothing was brought against goodwill. Goodwill in Balance sheet of Rs.10,000 is revalued as 30,000.What will be value of goodwill in the books after the admission of C?

• A. $Rs.60,000$
• B. $Rs.30,000$
• C. $Rs.20,000$
• D. $Rs.15,000$

Answer 1

Answer: (B)

$Rs.30,000$

When a new partner is admitted into the partnership, assets are revalued and liabilities are reassessed. A revaluation account is opened for the purpose. This account is debited with all reduction in the value of assets and increase in liabilities and credited with increase in the value of assets and decrease in the value of liabilities.

Revalued figure of assets and liabilities are then shown in the balance sheet after admission of new partner.