Balance of Capital account of A and B were Rs 40,000 and Rs 30,000 res

1.	Balance of Capital account of A and B were Rs 40,000 and Rs 30,000 respectively. For the year ended 31-12-2016. Balance of general reserve stood at Rs 20,000. C is admitted on 01-01-2017 for 1/3rd share in profits. C brings in Rs 50,000 for his share of capital. Calculate value of goodwill.
Answer» Adjusted capital of old partner = 40,000 + 30,000 + 20,000 (General Reserve) = Rs 90,000 Total capital of firm on the Basis of C’s capital \(= \frac { 50,000 \times 3 }{ 1 } = 1,50,000\) Goodwill = 1,50,000 – 90,000 – 50,000 = Rs 10,000

Balance of Capital account of A and B were Rs 40,000 and Rs 30,000 respectively. For the year ended 31-12-2016. Balance of general reserve stood at Rs 20,000. C is admitted on 01-01-2017 for 1/3rd share in profits. C brings in Rs 50,000 for his share of capital. Calculate value of goodwill.

Answer»

Adjusted capital of old partner = 40,000 + 30,000 + 20,000 (General Reserve)

= Rs 90,000

Total capital of firm on the Basis of C’s capital

\(= \frac { 50,000 \times 3 }{ 1 } = 1,50,000\)

Goodwill = 1,50,000 – 90,000 – 50,000

= Rs 10,000