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Application of Shares

Upon a admiss...

Question

Upon a admission of Champak Lal in a partnership firm as a new partner for 1/4th share of profit, the goodwill of the firm is valued at Rs.40,000. Goodwill to be brought in cash by Champak will be ______.

A

Rs.40,000

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B

Rs.10,000

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C

Rs.30,000

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D

Rs.20,000

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Solution

The correct option is D Rs.10,000
goodwill of firm is 40000
share of incoming partner=1/4
=40000*1/4
=10000

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Similar questions

Q. Upon a admission of Champak Lal in a partnership firm as a new partner for 1/4th share of profit, the goodwill of the firm is valued at Rs.40,000. Goodwill will be raised by _____.

Q. Consequent upon admission of a new partner in a firm the value of the goodwill is valued at Rs.60,000. But there exists a goodwill account in the balance sheet which stood at Rs.48,000 what would be treatment of goodwill at the time of admission of a new partner if the firm follows revaluation method of goodwill?

A

B

are partners in firm sharing profits and losses in the ratio of

3 : 2

C

into partnership for

1 / 5^{t h}

C

R s . 30, 000

R s . 10, 000

as goodwill. At the time of admission of

C

, goodwill appears in the Balance Sheet of

A

B

R s . 3, 000

. The new profit sharing ratio of the partners will be

5 : 3 : 2

. Pass necessary Journal entries.

A

B

are equal partners. They decide to admit

C

{\frac{1}{3}}^{r d}

share. for the purpose of admission of

C

, goodwill of the firm is to be valued at four years purchase of super profit. Average capital employed in the firm is Rs.

1, 50, 000

. Normal rate of return may be taken as

15

p.a. Average profit of the firm Rs.

40, 000

. Calculate value of goodwill.

Mohan Lal and Sohan Lal were partners in a firm sharing profits and losses in 3 : 2 ratio. They admitted Ram Lal for $\frac{1}{4}$ share on 1.1.2003. It was agreed that goodwill of the firm will be valued at 3 years purchase of the average profits of the last 4 years which were Rs.50,000 for 2003, Rs. 60,000 for 2004, Rs. 90,000 for 2005 and Rs. 70,000 for 2006. Ram Lal did not bring his share of goodwill premium in cash. Record the necessary journal entries in the books of the firm on Ram Lal's admission when

(a) Goodwill already appears in the books at Rs. 2,02,500.

(b) Goodwill appears in the books at Rs.2,500.

(c) Goodwill appears in the books at Rs. 2,05,000.

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