Question

A and B are partners sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership for `1/5`th share in profit. He pays ₹ 1,00,000 as goodwill. The ratio of the partners A, B and C in the new firm would be 3 : 1 : 1. Goodwill will be credited to ______.

Options

• Only A ₹ 1,00,000

• Only B ₹ 1,00,000

• A ₹ 60,000; B ₹ 40,000

• A ₹ 75,000; B ₹ 25,000

Answer 1

A and B are partners sharing profits and losses in the ratio of 3 : 2. C is admitted into partnership for a `1/5`th share in profit. He pays ₹ 1,00,000 as goodwill. The ratio of the partners A, B and C in the new firm would be 3 : 1 : 1. Goodwill will be credited to only B ₹ 1,00,000.

Explanation:

Calculate the Sacrificing Share for Each Partner:

A’s Sacrifice = `3/5 - 3/5`

= 0

B’s Sacrifice = `2/5 - 1/5`

= `1/5`

The sacrificing ratio of A and B is effectively 0 : 1. The entire goodwill amount of ₹ 1,00,000 brought by C must be credited solely to the partner who sacrificed their share, which is B.

Amount credited to B =  ₹ 1,00,000