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P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years.R died on 1st January, 2018. The firm's profits for the last four years ended 31st December, were as: 2014 − ₹ 1,20,000; 2015 − ₹ 80,000; 2016 − ₹ 40,000; 2017 − ₹ 80,000.(a) Determine the amount that should be credited to R in respect of his share of Goodwill.(b) Pass Journal entry without raising Goodwill Account for its adjustment. |
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Answer» P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided in the Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profit credited to his account during the last four completed years. R died on 1st January, 2018. The firm's profits for the last four years ended 31st December, were as: 2014 − ₹ 1,20,000; 2015 − ₹ 80,000; 2016 − ₹ 40,000; 2017 − ₹ 80,000. (a) Determine the amount that should be credited to R in respect of his share of Goodwill. (b) Pass Journal entry without raising Goodwill Account for its adjustment. |
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