Question

Asha and Nisha are partners sharing profits in the ratio of 2:1. Kashish was admitted for `1/4` share of which `1/8` was gifted by Asha. The remaining was contributed by Nisha.

Goodwill of the firm is valued at ₹ 40,000. How much amount for goodwill will be credited to Nisha’s Capital account?

Options

• ₹ 2,500

• ₹ 5,000

• ₹ 20,000

• ₹ 40,000

Answer 1

₹ 5,000

Explanation:

Nisha’s sacrifice (remaining): Kashish’s total share minus Asha’s sacrifice.

Nisha’s Sacrifice = Kashish’s Total Share − Asha’s Sacrifice

= `1/4 − 1/8`

= `(1 xx 2)/(4 xx 2) - 1/8`

= `2/8 - 1/8`

= `1/8`

Asha and Nisha both sacrificed `1/8` of the profits.

The total goodwill of the firm is valued at ₹ 40,000. Kashish's share is `1/4` of this total value: 

Kashish’s Goodwill Share = `40,000 xx 1/4`

= 10,000

The ₹ 10,000 goodwill amount is distributed to Asha and Nisha in their sacrificing ratio of 1 : 1.

Amount credited to Asha = `10,000 xx 1/2`

= 5,000

Amount credited to Nisha = `10,000 xx 1/2`

= 5,000

The amount of goodwill credited to Nisha’s Capital account is ₹ 5,000.