Question

A & B are partners with capitals of $Rs.14,000$ and $Rs.28,000$ respectively and sharing profits equally. They admitted C as their third partner with $1/4$ profits of the firm on the payment of $Rs.16,800$. The amount of hidden goodwill is _________.

• A. $Rs.8,400$
• B. $Rs.14,000$
• C. $Rs.11,200$
• D. None of the above

Answer 1

The correct option is A $Rs.8,400$

When goodwill value is not given in question asked it is calculated on the basis of total capital and profit sharing ratio.

C brings Rs. 16800 for 1/4 share in the firm.

Calculation of hidden goodwill :

Full capital of the firm will be [16800 * (4/1)] = Rs. 67200

Less : Total capitals of A + B + C = Rs. (14000 + 28000 + 16800) = Rs. 58800

Hidden goodwill Rs. 8400