Goodwill

Correct answer: A. A (₹90000)

A's share decreased from (2/3) to (1/3), so sacrifice is (1/3). Credit is (270000 \times \frac{1}{3}=₹90000).

Correct answer: A. A alone

A's old share is (3/5) and new share (2/5), so sacrifice is (1/5). B's old and new share remain (2/5).

Correct answer: A. ₹40,000

A’s old share is 3/5 and his new share is 2/5. Therefore, A’s sacrificing share is 3/5 − 2/5 = 1/5. A will be credited in proportion to this sacrifice: ₹2,00,000 × 1/5 = ₹40,000. B’s share remains 2/5, so B makes no sacrifice. Exam tip: When the incoming partner brings goodwill in cash, the sacrificing partners are credited in their sacrificing ratio.

Correct answer: A. ₹1,20,000

A retiring partner is credited with his share of goodwill based on his old profit-sharing ratio. B's old share is \(\frac{2}{3+2+1}=\frac{2}{6}=\frac{1}{3}\). Therefore, the amount credited to B's Capital Account is \(₹3,60,000 \times \frac{1}{3}=₹1,20,000\). The new ratio of 4:1 applies only to the continuing partners, A and C; it does not change B's old share of goodwill. Exam tip: For a retiring partner, calculate goodwill compensation using the partner's old profit-sharing fraction unless the question specifies a different arrangement.

Correct answer: A. (₹20000)

New partner's goodwill share is (500000 \times \frac{1}{10}=₹50000). Unpaid premium is (50000-30000=₹20000).

Correct answer: A. Approximately (₹243333)

Deduct (₹50000) from second year and add (₹30000) to third year. Adjusted total is (₹730000), so average is approximately (₹243333).

Correct answer: A. ₹3,20,000

Normal profit = ₹18,00,000 × 10% = ₹1,80,000. Super profit = Average profit − Normal profit = ₹2,60,000 − ₹1,80,000 = ₹80,000. Goodwill = Super profit × Years’ purchase = ₹80,000 × 4 = ₹3,20,000. Therefore, option A is correct. Option B is only the super profit, not the value of goodwill. Exam tip: calculate normal profit first, then super profit, and finally multiply it by the number of years’ purchase.

Correct answer: A. When capitalised value is less than actual capital employed

Goodwill (= capitalised value - actual capital). If capitalised value is lower, positive goodwill does not arise.

Correct answer: A. No positive goodwill arises

Capitalised value is (90000 \div 15%=₹600000), which is less than actual capital. Therefore no positive goodwill exists.

Correct answer: A. (4:1)

A's sacrifice is (4/5 \times 1/10=4/50) and B's sacrifice is (1/5 \times 1/10=1/50). Sacrificing ratio is (4:1).

Correct answer: A. (₹10000)

New partner's goodwill share is (250000 \times \frac{1}{5}=₹50000). B receives (50000 \times \frac{1}{5}=₹10000).

Correct answer: A. (₹56000)

Deceased partner's goodwill share is (600000 \times \frac{2}{15}=₹80000). First continuing partner's share is (80000 \times \frac{7}{10}=₹56000).

Correct answer: A. Old goodwill is written off in old ratio

Old goodwill appearing in books belongs to old partners. It is written off in old ratio before admission.

Correct answer: A. (₹24000)

New partner's goodwill share is (420000 \times \frac{1}{7}=₹60000). Second old partner receives (60000 \times \frac{2}{5}=₹24000).

Correct answer: A. Only B

A's share decreases from (2/5=24/60) to (4/12=20/60), and B's decreases from (3/5=36/60) to (5/12=25/60). So both sacrifice.

Correct answer: A. (₹20000)

C's goodwill share is (300000 \times \frac{3}{12}=₹75000). A is credited (75000 \times \frac{4}{15}=₹20000).

Correct answer: A. New partner's account is debited and sacrificing partners are credited

Even when cash is not brought the sacrifice of old partners is adjusted. Hence new partner is debited and sacrificing partners are credited.

Correct answer: A. Internal adjustment based on sacrifice and gain

Credit in old ratio and debit in new ratio gives the same effect as sacrifice and gain adjustment. This is an important exam shortcut.

Correct answer: A. ₹5,00,000

Super profit = Average Profit − Normal Profit = ₹1,75,000 − ₹1,25,000 = ₹50,000. Under the capitalisation of super profit method, Goodwill = Super Profit ÷ Normal Rate of Return = ₹50,000 ÷ 10% = ₹5,00,000. Option B is only the super profit, not the goodwill. Exam tip: divide by the rate expressed as a percentage, or equivalently multiply by 100 and divide by the rate number.

Correct answer: A. Weighted average profit method

In rising profits giving more importance to recent years may be appropriate. Therefore weighted average method is useful.

Correct answer: A. (₹80000)

Old partners are credited with the full goodwill share of the new partner. It is (480000 \times \frac{1}{6}=₹80000).

Correct answer: A. (₹235000)

Adjusted profits are (₹180000), (₹260000), (₹310000) and average is (₹250000). After deducting future salary maintainable profit is (₹235000).

Correct answer: A. ₹3,00,000

Under the capitalization of average profit method, capitalized value = Average Profit × 100 ÷ Normal Rate of Return = ₹2,16,000 × 100 ÷ 12 = ₹18,00,000. Goodwill = Capitalized Value − Actual Capital Employed = ₹18,00,000 − ₹15,00,000 = ₹3,00,000. Option B is only the capitalized value, not goodwill. Exam tip: Always deduct the actual capital employed from the capitalized value.

Correct answer: A. ₹4,50,000

Under the capitalisation of super profit method, goodwill = super profit ÷ normal rate of return. Therefore, goodwill = ₹72,000 ÷ 16% = ₹72,000 ÷ 0.16 = ₹4,50,000. Option C is merely the amount of super profit, not the value of goodwill. Exam tip: Convert the percentage into a decimal before dividing.

Correct answer: A. (₹264000)

Normal profit is (2200000 \times 11%=₹242000) and super profit is (₹88000). Goodwill is (88000 \times 3=₹264000).