Adjusted capital of X and Y is Rs 30,000 and Rs 25,000 respectively. Z

1.	Adjusted capital of X and Y is Rs 30,000 and Rs 25,000 respectively. Z brings in Rs 25,000 as capital for 1/4 share of profits in the firm. Calculate value of goodwill.
Answer» Total capital of firm on the basis of Z’s capital \(= \frac { 25,000 \times 4 }{ 1 } \) = Rs 1,00,000 Goodwill of the Firm = Total Capital – Old Partner’s Adjustment Capital – Z’s capital = 1,00,000 – 55,000 – 25,000 = 1,00,000 – 80,000 = Rs 20,000 So, goodwill is Rs 20,000.

Adjusted capital of X and Y is Rs 30,000 and Rs 25,000 respectively. Z brings in Rs 25,000 as capital for 1/4 share of profits in the firm. Calculate value of goodwill.

Answer»

Total capital of firm on the basis of Z’s capital

\(= \frac { 25,000 \times 4 }{ 1 } \)

= Rs 1,00,000

Goodwill of the Firm = Total Capital – Old Partner’s Adjustment Capital – Z’s capital

= 1,00,000 – 55,000 – 25,000

= 1,00,000 – 80,000

= Rs 20,000

So, goodwill is Rs 20,000.