Question

Ram and Shyam are partners in a firm with capital of Rs 4,80,000 and Rs 3,10,000, respectively. They admitted Ganesh as a partner with l/4th share of profit. Ganesh brings Rs 3,00,000 as his capital. Ganesh's share of goodwill will be __________.

• A. $Rs.1,10,000$
• B. $Rs.27,500$
• C. $Rs.17,500$
• D. $Rs.70,000$

Answer 1

The correct option is B $Rs.27,500$

When in the question goodwill is not specifically given, then it is case of hidden goodwill.

Calculation of hidden goodwill:

Hidden goodwill = (Incoming partner's capital * Reciprocal of share of incoming partner) - Total capital after taking into consideration the capital brought in by new partner

Hidden goodwill = [Rs. 300000 * (4/1)] - Rs. (480000 + 310000 + 300000)

Hidden goodwill = Rs. 1200000 - Rs. 1090000

Hidden goodwill = Rs. 110000

Ganesh's share of goodwill for 1/4th share = Total goodwill/4

Ganesh's share of goodwill for 1/4th share = Rs. 110000/4

Ganesh's share of goodwill for 1/4th share = Rs. 27500