Goodwill

Add abnormal loss and deduct abnormal profit. Adjusted total is (₹670000) so average is approximately (₹223333).

Under the capitalization of average profit method, capitalized value of the business = Average Profit × 100 ÷ Normal Rate of Return = ₹1,50,000 × 100 ÷ 12 = ₹12,50,000. Goodwill = Capitalized Value − Actual Capital Employed = ₹12,50,000 − ₹9,50,000 = ₹3,00,000. Option B is the capitalized value of the business, not goodwill. Exam tip: first calculate the capitalized value and then deduct the actual capital employed.

Normal profit = Capital employed × Normal rate of return = ₹16,00,000 × 13% = ₹2,08,000. Therefore, super profit = Average profit − Normal profit = ₹2,40,000 − ₹2,08,000 = ₹32,000. ₹2,08,000 is the normal profit, not the super profit. In the exam, calculate normal profit first and subtract it from average profit.

Under the capitalization of super profit method, goodwill = super profit ÷ normal rate of return. Therefore, goodwill = ₹54,000 ÷ 18/100 = ₹3,00,000. Option B results from multiplying the super profit by 18%, which is not the required procedure. Exam tip: Convert the percentage rate into a decimal or fraction before dividing.

The direct answer is option A: future maintainable profit is ₹180,000. Maintainable profit means the profit expected to continue in future after making necessary adjustments. The present average profit is ₹200,000. Additional salary will be a future expense, so subtract ₹30,000. Rent saving will reduce future expense, so add ₹10,000. Step by step: ₹200,000 − ₹30,000 = ₹170,000; then ₹170,000 + ₹10,000 = ₹180,000. Option A is correct. Option B, ₹240,000, adds both adjustments and wrongly treats the salary as income. Option C, ₹200,000, makes no adjustment. Option D, ₹160,000, subtracts both salary and rent saving, even though saving increases profit. The memory rule is: future expense subtracts; future saving or extra income adds.

C's share of total goodwill is (₹60000) and sacrificing ratio is (1:1). Therefore A is credited (₹30000).

Direct answer: Option A, 17:15:8. The old total ratio is 5 + 3 = 8, so A’s old share is 5/8 and B’s is 3/8. C receives 1/5, and A alone sacrifices this amount. A’s new share = 5/8 − 1/5 = 25/40 − 8/40 = 17/40. B does not sacrifice, so B remains at 3/8 = 15/40. C’s share is 1/5 = 8/40. Therefore the new ratio A:B:C = 17:15:8, so option A is correct. Option B, 5:3:1, uses the old numbers without correctly adjusting A and without expressing the admitted share on a common basis. Option C incorrectly reduces A to 4. Option D reverses the order and gives unrelated numbers. Memory cue: subtract the new partner’s share only from the partner who sacrifices.

New partner's goodwill share is (300000 \times \frac{1}{6}=₹50000). Cash brought is (₹30000), so balance (₹20000) is debited.

Total capital based on C's capital is (180000 \times 5=₹900000). Actual total capital is also (450000+270000+180000=₹900000), so hidden goodwill is nil.

Total capital based on C's capital is (200000 \times 4=₹800000). Actual capital is (520000+200000=₹720000), so goodwill is (₹80000).

Old goodwill is written off in old profit sharing ratio. B's share is (96000 \times \frac{2}{6}=₹32000).

A's new share is (3/5) and old share (5/10), so gain is (1/10). C's new share is (2/5) and old share (2/10), so gain is (2/10).

Retiring partner's goodwill share is (500000 \times \frac{1}{5}=₹100000). First continuing partner's share is (100000 \times \frac{3}{5}=₹60000).

C's old share is (1/5). Goodwill share (400000 \times \frac{1}{5}=₹80000) is credited to executor account.

Under the old ratio, B’s share was 5/12, while under the new ratio it is 2/5. Therefore, B’s sacrifice = 5/12 − 2/5 = (25 − 24)/60 = 1/60. A’s share increases from 7/12 to 3/5, so A gains rather than sacrifices. Option C is incorrect because 1/12 is not the difference between B’s old and new shares. Exam tip: Calculate sacrifice as old share minus new share.

A's share increases from (3/5) to (5/8), so gain is (1/40). Debit is (240000 \times \frac{1}{40}=₹6000).

A is credited (₹120000) in old ratio and debited (₹60000) in new ratio. Net effect is credit (₹60000).

Compare the old and new shares: the first partner’s share decreases from \(4/9\) to \(3/9\), giving a sacrifice of \(1/9\). The second partner’s share increases from \(2/9\) to \(3/9\), so that partner gains, while the third partner’s share remains unchanged. Therefore, the first partner sacrifices. Since goodwill is ₹3,60,000, the value of the sacrifice is \(1/9 \times 3,60,000 = ₹40,000\). Exam tip: Sacrificing ratio = Old ratio − New ratio; a positive difference indicates sacrifice.

The first partner's old share is \(\frac{4}{9}\), while his new share is \(\frac{3}{9}\). Therefore, his sacrifice is \(\frac{4}{9}-\frac{3}{9}=\frac{1}{9}\). The goodwill credited is \(₹3,60,000 \times \frac{1}{9}=₹40,000\). The second partner gains \(\frac{1}{9}\) and will therefore be debited. Exam tip: Sacrifice ratio = old share − new share.

Normal profit = ₹10,00,000 × 12% = ₹1,20,000. Super profit = Average profit − Normal profit = ₹1,60,000 − ₹1,20,000 = ₹40,000. Therefore, Goodwill = Super profit × Years' purchase = ₹40,000 × 3 = ₹1,20,000. Option B incorrectly multiplies the average profit directly by 3. Exam tip: First calculate normal profit, deduct it from average profit to find super profit, and then multiply by the years' purchase.

After deducting abnormal profit average is ((100000+140000+160000)\div3=₹133333). Deduct future expense to get approximately (₹113333).

Direct answer: Option A, ₹40,000. The new partner brings ₹90,000 as goodwill, and this amount is distributed among the old partners in their sacrificing ratio 2:3:4. First add the ratio parts: 2 + 3 + 4 = 9. The third old partner’s share is 4/9. Therefore credit to the third partner = ₹90,000 × 4/9 = ₹40,000. Option A is correct. Option B, ₹20,000, applies 2/9, the first partner’s share. Option C, ₹30,000, applies 3/9, the second partner’s share. Option D gives the entire goodwill to the third partner and ignores the other two sacrificing partners. The cash is credited to the firm’s bank or cash account and credited to old partners’ capital or current accounts according to sacrifice. Memory cue: divide goodwill by total ratio parts, then multiply by the relevant partner’s part.

Actual total adjusted capital is (820000+250000=₹1070000). Hidden goodwill is (1200000-1070000=₹130000).

Private payment does not pass through firm's bank or books. Therefore no entry is made in firm's books.

The firm receives ₹1,00,000 in the bank from the new partner. The old partners withdraw half of it, i.e. ₹50,000. Therefore, the net increase in the bank balance is ₹1,00,000 − ₹50,000 = ₹50,000. Exam tip: record both the receipt of the goodwill premium and its withdrawal when finding the net bank effect.