Question

A and B are partners in a firm. They admit C as a partner with a 1/5th share in the profits of the firm. C brings ₹ 1,50,000 as his share of capital. The value of the total assets of the firm is ₹ 5,50,000, and outside liabilities are valued at ₹ 70,000 on that date. C’s share of hidden goodwill will be ______.

Options

• ₹ 2,70 000

• ₹ 54,000

• ₹ 1,20,000

• ₹ 24,000

Answer 1

A and B are partners in a firm. They admit C as a partner with a 1/5th share in the profits of the firm. C brings ₹ 1,50,000 as his share of capital. The value of the total assets of the firm is ₹ 5,50,000, and outside liabilities are valued at ₹ 70,000 on that date. C’s share of hidden goodwill will be ₹ 24,000.

Explanation:

Hidden Goodwill = `(1,50,000 xx 5/1) - (5,50,000 - 70,000 + 1,50,000)`

= 1,20,000

C’s share of Goodwill = `1,20,000 xx 1/5`

= ₹ 24,000