These are the options for the Question: Manas and Mili are partners in a firm sharing profits in the ratio of 3: 2. Anita is admitted as a new partner for 1/4″ share in future profits. Capitals of Manas and Mili were % 3,00,000 and % 1,50,000
respectively. Anita brought % 2,00,000 as her capital. The value of goodwill of the firm on Anita’s admission.
(A) %2,50,000 (B) %8,00,000
(C) % 4,50,000 (D) %1,50,000
The correct answer is –
To find the value of goodwill of the firm on Anita’s admission, we can use the following formula:
Goodwill = (New partner’s capital / Total capital) x Total goodwill
First, let’s calculate the total capital of the firm:
Total capital = Capital of Manas + Capital of Mili + Anita’s capital Total capital = %3,00,000 + %1,50,000 + %2,00,000 Total capital = %6,50,000
Next, let’s calculate the new profit sharing ratio after Anita’s admission:
Manas and Mili’s share = 3 + 2 = 5 Anita’s share = 1/4 = 1.25
New total share = 5 + 1.25 = 6.25
Manas’ share = 3/6.25 = 48% Mili’s share = 2/6.25 = 32% Anita’s share = 1.25/6.25 = 20%
Now, let’s calculate the average of the old profit sharing ratio and the new profit sharing ratio:
Average ratio = (3/5 + 2/5 + 1.25/4) / 2 Average ratio = 0.65
Therefore, the goodwill of the firm can be calculated as follows:
Goodwill = (Anita’s capital / Total capital) x (Average ratio – Anita’s share) x 2 Goodwill = (%2,00,000 / %6,50,000) x (0.65 – 0.2) x 2 Goodwill = %0.3077 x 0.45 x 2 Goodwill = %0.277 x %6,50,000 Goodwill ≈ %1,80,000
Therefore, the value of goodwill of the firm on Anita’s admission is approximately %1,80,000. Option (D) %1,50,000 is not the correct answer.
