Vinay and Naman are partners sharing profits in the ratio of 4: 1. Their capitals were Rs. 90,000 and Rs. 70,000 respectively. They admitted Prateek for 1 / 3 share in the profits. Prateek brought Rs. 1,00,000 as his capital. Calculate the value of firm’s goodwill. (CBSE 2018, 2018 C)

SOLUTION

Prateek’s share = 1 / 3; Prateek’s Capital = Rs. 1,00,000.
(a) Based on Prateek’s Capital, Total Capital of the firm will be = Rs. 1,00,000 x 3 / 1 = Rs. 3,00,000
(b) Total existing capital of Vinay, Naman and Prateek = 90,000 + 70,000 + 1,00,000 = Rs. 2,60,000
(c) Value of Firm’s Goodwill (A – B) = 3,00,000 – 2,60,000 = Rs. 40,000.



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