Question

A and B are sharing profits and losses in the ratio of 4 :1. C is admitted as a new partner for 1/3rd share of profits for which he pays Rs. 30,000 as goodwill. If A and B agree to share future profits equally, then the amount of goodwill to be credited to A would be :

• A. Rs. 30,000
• B. Rs. 90,000
• C. Rs. 48,000
• D. Rs. 42,000

Answer 1

Answer: (D)

Rs. 42,000

Total value of goodwill as per C's share = Rs.30000 * (3/1) = Rs.90000

Old ratio (A and B) = 4 : 1

New ratio (A, B and C) = 1 : 1 : 1

(Gaining) / Sacrificing ratio = Old ratio - New ratio

A's sacrifice = (4/5) - (1/3) = 7/15

B's sacrifice = (1/5) - (1/3) = -2/15 (Gain)

Therefore, amount of goodwill credited to A's account in sacrificing ratio

= Rs. 90000 * (7/15) = Rs. 42000