X and Y are two partners in firm having share capital of Rs.10,000 and Rs.15,000 respectively. Z is admitted for 1/3 share of profit for which he is to bring Rs.15,000 for his share of capital. What is the goodwill of the firm?

R s .10, 000

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R s .9, 000

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R s .5, 000

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R s .11, 000

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Solution

The correct option is C $R s .5, 000$
When the value of the goodwill of the firm is not specifically given, the value of goodwill has to be inferred as follows:
Goodwill = (Incoming partner's capital * Reciprocal of share of incoming partner) - Total capital after taking into consideration the capital brought in by incoming partner.
Goodwill = [Rs. 15000 * (3/1)] - Rs. (10000 + 15000 + 15000)
Goodwill = Rs. 45000 - Rs. 40000
Goodwill = Rs. 5000

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