A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. $20, 000$ as capital and Rs. $5, 000$ being half of the premium for goodwill. The value of goodwill of the firm is _____________.

R s .10, 000

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R s .40, 000

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R s .20, 000

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None of these

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Solution

The correct option is B $R s .40, 000$
Calculation of goodwill:
D's contribution of Rs. 5000 consists of only half of 1/4 of goodwill
Therefore, total goodwill of firm should be Rs. 5000 * (4/1) * 2 = Rs.40000

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A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 as capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm is _____________.

The correct option is B Rs.40,000Calculation of goodwill:D's contribution of Rs. 5000 consists of only half of 1/4 of goodwill Therefore, total goodwill of firm should be Rs. 5000 * (4/1) * 2 = Rs.40000

A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. $20, 000$ as capital and Rs. $5, 000$ being half of the premium for goodwill. The value of goodwill of the firm is _____________.

The correct option is B $R s .40, 000$
Calculation of goodwill:
D's contribution of Rs. 5000 consists of only half of 1/4 of goodwill
Therefore, total goodwill of firm should be Rs. 5000 * (4/1) * 2 = Rs.40000