Question

A, B and C are the partners in a business firm sharing their profits in the ratio of 4 : 3 : 2. A new partner D enters the firm. The new profit sharing of A, B, C and D is 5 : 4 : 2: 1. D contributes a goodwill of $Rs.36,000$. This goodwill is to be allocated among A, B and C. Which one of the following will be the correct allocation?

• A. A - $Rs.16,000$, B - $Rs.12,000$, C - $Rs.8,000$
• B. A - $Rs.12,000$, B - $Rs.8,000$, C - $Rs.16,000$
• C. A - $Rs.12,000$, B - Nil, C - $Rs.24,000$
• D. A - $Rs.24,000$, B - Nil, C - $Rs.12,000$

Answer 1

Answer: (C)

A - $Rs.12,000$, B - Nil, C - $Rs.24,000$

At the time of admission of a new partner, existing partners suffer a loss in terms of share of profit and due to this reason incoming partner has to bring amount of capital and goodwill to compensate sacrificing partners in their sacrificing ratio.

Calculation of sacrificing ratio of old partners for the given question :

Sacrificing ratio = Old ratio - New ratio

A's sacrifice = (4/9) - (5/12) = 1/36

B's sacrifice = (3/9) - (4/12) = 0

C's sacrifice = (2/9) - (2/12) = 2/36

Allocation of goodwill among sacrificing partner (A and C) will be in ratio of 1:2

A's share of goodwill = Rs. 36000 * (1/3) = Rs. 12000

B's share of goodwill = Rs. 36000 * (2/3) = Rs. 24000