Question

Assertion (A): A and B are partners sharing profits in the ratio of 2 : 1. They agreed that in future they will get interest on Capital @ 6% p.a. and will charge interest on drawings also at the same rate. They also decided that goodwill will be valued and sacrificing partners will be compensated by gaining partners.

Reason (R): Profit sharing ratio of A and B has not changed and hence there is no sacrificing or gaining partner. As such, goodwill need not be valued.

In the context of the above two statements, which of the following is correct?

विकल्प

• (A) is correct, but (R) is wrong.

• Both (A) and (R) are correct.

• (A) is wrong, but (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

(A) is wrong, but (R) is correct.

Explanation:

• Merely introducing interest on capital and drawings does not require goodwill valuation. Since the profit-sharing ratio remains 2 : 1, there are no sacrificing or gaining partners.
• As the profit-sharing ratio has not changed, there is no sacrifice or gain, so goodwill need not be valued.