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Hidden Goodwill

The extra cap...

Question

The extra capital of Rs.10,000 bought by new partner above the investment of old partners to share the same proportion of profits is .

A

capital

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B

goodwill

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C

hidden goodwill

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D

explicit goodwill

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Solution

The correct option is C hidden goodwill
Hidden goodwill is extra capital bought by new partner over and above the required capital to be bought for same share in the business.

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Similar questions

Q. A & B are partners sharing the profit in the ratio of

3 : 2

. They take C as the new partner, who brings in Rs.

25, 000

against capital and Rs.

10, 000

against goodwill. New profit sharing ratio is

1 : 1 : 1

. In what ratio will this amount will be shared among the old partners A & B.

A

B

are partners in a business sharing profits and losses in the ratio of

1 / 3^{r d}

2 / 3^{r d}

1^{s t}

April,2018, their capitals are

R s . 8, 000

R s . 10, 000

respectively. On that date, they admit

C

in partnership and give him

1 / 4^{t h}

share in the future profits.

C

R s . 8, 000

as his capital and

R s . 6, 000

as goodwill. The amount of goodwill is immediately withdrawn by the old partners in cash. draft the Journal entries and show the Capital Accounts of all the Partners. Calculate proportion in which partners would share profits and losses in future.

Q. Consider the following statements :
1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio.
2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio.
3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio.
Which of the above statement/s is/are true ?

Q. A and B are partners sharing the profit in the ratio of 3 : 2 they take C as the new partner, who brings in 25,000 against capital and 10,000 against goodwill. New profit sharing ratio is 1 : 1 : 1. In what ratio will this amount be shared among the old partners A and B?

Muskan and Manya were partners in a firm sharing profits and losses in the ratio of 7 : 3. Their capitals were Rs 2,00,000 and Rs 1,50,000 respectively. They admitted Anviksha on 1st April, 2018 as a new partner for $\frac{1}{6}$ th share in future profits. Anvisksha brought Rs 1,00,000 as her capital. Calculate the value of goodwill of the firm on the basis of the new partners' share of profit. It was also given that profit on revaluation was Rs 10,000.

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