Goodwill Accounting

Goodwill premium is apportioned according to the sacrificing ratio. The total number of parts is 3+1+4=8. The third partner is entitled to 4 parts, so his receipt is ₹64,000×4/8 = ₹32,000. Option B represents three parts, option C represents one part, and option D is the complete premium. Thus only option A matches the required distribution.

The direct answer is option A, ₹15,000. First calculate the goodwill premium required from the new partner. Total goodwill is ₹2,50,000 and the new partner receives 1/5 share. Therefore, required premium = ₹2,50,000 × 1/5 = ₹50,000. He brings ₹35,000 in cash. The goodwill not brought is the difference: ₹50,000 − ₹35,000 = ₹15,000. Option A is correct. Option B, ₹50,000, is the full premium required before deducting cash. Option C, ₹35,000, is the amount actually brought, not the amount missing. Option D, ₹85,000, incorrectly adds the required premium and the cash brought; the cash must be subtracted because it has already been paid. The phrase “not brought” means the unpaid part of the new partner’s goodwill obligation. The calculation does not require the old profit-sharing ratio because the question asks only for the amount not brought. Memory cue: find the partner’s required share first, then subtract what he actually brings.

Existing goodwill is written off in old ratio. The third partner's part is (2/9), so (₹18000) is debited.

Existing old goodwill is first removed. New goodwill is raised only when the question clearly instructs it.

Even when cash is not brought, full adjustment is made in sacrificing ratio. Dividing (₹28000) in (3:4) gives A (₹12000) and B (₹16000).

Under the old ratio, A’s share is 5/6 and B’s share is 1/6. After C’s admission, A’s share becomes 4/6 and B’s remains 1/6. Thus, A sacrifices 5/6 − 4/6 = 1/6, while B sacrifices nothing. Therefore, the entire goodwill premium of ₹30,000 is credited only to A. Exam tip: Goodwill premium is distributed among sacrificing partners in their sacrificing ratio.

The new partner’s 1/5 share is acquired from the second and third partners in the ratio 1:3. Thus, the second partner sacrifices 1/5 × 1/4 = 1/20, while the third partner sacrifices 1/5 × 3/4 = 3/20. Therefore, the premium is distributed in the ratio 1:3. The third partner receives ₹60,000 × 3/4 = ₹45,000. Exam tip: goodwill premium is credited according to the sacrificing ratio, not the old profit-sharing ratio.

Total sacrifice equals new partner's share (1/6). Since first sacrifices (1/12), second also sacrifices (1/12).

Add back abnormal loss to get normal average profit (₹115000). Goodwill is (₹115000 \times 3=₹345000).

Total profit = ₹50,000 + ₹65,000 + ₹75,000 + ₹90,000 = ₹2,80,000. Average profit = ₹2,80,000 ÷ 4 = ₹70,000. Therefore, goodwill = Average Profit × Years’ Purchase = ₹70,000 × 2 = ₹1,40,000. ₹2,80,000 is the total profit and ₹70,000 is only the average profit, so neither is the goodwill value. Exam tip: calculate the average profit first, then multiply it by the years’ purchase.

Super profit is (₹36000) and total goodwill is (₹72000). New partner's share is (₹72000 \times 1/8=₹9000).

Goodwill premium is credited to the old partners in their sacrificing ratio, not in their old profit-sharing ratio. B’s share of the sacrifice is \(\frac{2}{1+2}=\frac{2}{3}\). Therefore, B receives \(₹30,000 \times \frac{2}{3}=₹20,000\). ₹10,000 results from applying the 1:2 ratio incorrectly. Exam tip: Always use the sacrificing ratio when distributing a goodwill premium on admission.

Estimated total capital is (₹75000 \div 1/5=₹375000). Actual total capital is (₹345000), so goodwill is (₹30000).

Estimated total capital is (₹300000). Actual total capital is (₹310000), so hidden goodwill is taken as zero.

New partner's premium is (₹210000 \times 1/7=₹30000). First partner's part is (4/7), so (₹17142.86) is credited.

Premium for goodwill is given only to sacrificing partners. An old partner who gains is not entitled to premium.

Old shares are (3/8,5/8) and new shares are (4/12,5/12). Sacrifices are (1/24) and (5/24), so the ratio is (1:5).

Old partners are credited with the full premium (₹45000). Cash and current account are only modes of payment.

The direct answer is option A, 60%. When the goodwill premium is credited to old partners, the full credited amount initially increases their capital or current accounts. If they withdraw 40% of that premium, the part remaining is the original 100% minus the withdrawn 40%. Thus, remaining part = 100% − 40% = 60%. Option A is correct. Option B, 40%, is the amount withdrawn, not the amount left. Option C, 100%, would be correct only if nothing were withdrawn. Option D, zero, would be correct only if the entire premium were withdrawn. For example, if the credited premium is ₹50,000, withdrawal of 40% means ₹20,000 is withdrawn and ₹30,000, or 60%, remains in the capital accounts. The bank balance falls by the amount withdrawn, while the remaining credit stays in capital. Memory cue: remaining percentage = 100% − withdrawn percentage. Do not confuse the withdrawn portion with the balance left.

The direct answer is A: the first old partner receives ₹18,750 from the ₹30,000 cash brought. The question says to distribute the cash part in the sacrificing ratio. That ratio is 5:3, so the total is 8 parts. The first partner receives \(5/8\) of the cash: \(₹30,000\times5/8=₹18,750\). Option A is correct. Option B, ₹25,000, would be five-sixths and does not follow 5:3. Option C, ₹11,250, is the second partner’s share, because \(₹30,000\times3/8=₹11,250\). Option D, ₹40,000, is greater than the cash actually brought and is impossible in this distribution. The total distributed must equal ₹30,000, and ₹18,750+₹11,250=₹30,000. The stated total goodwill and new share would imply ₹40,000 as the full premium, but the question specifically asks about the cash part, so ₹30,000 is the relevant base.

Direct answer: Option A, No entry. Goodwill is compensation paid to old partners for the share sacrificed by them. Here the new partner pays ₹55,000 privately and directly to the old partners, not to the firm. Therefore the firm neither receives cash nor records goodwill in its books. Step by step: the payment is personal; no firm bank account is involved; no firm asset or liability changes; hence no journal entry is passed. Option A is correct because transactions outside the firm are not recorded. Option B is wrong because the firm’s bank does not receive money. Option C is wrong because the firm has not purchased or recorded goodwill. Option D is wrong because old partners’ capital accounts are not adjusted by the firm for this private payment. Memory cue: private payment means outside the books, so no entry.

Since A and B sacrifice for C in their old ratio of 7:3, B receives \(\frac{3}{10}\) of the goodwill. Therefore, B’s share is \(₹50{,}000 \times \frac{3}{10}=₹15{,}000\). ₹35,000 is A’s share, not B’s. Exam tip: When the sacrifice is made in the old ratio, distribute the goodwill premium in that same old ratio.

The sacrificing ratio is 1/8 : 3/8 = 1 : 3. Total sacrifice is 1/8 + 3/8 = 1/2. Therefore, the first partner’s share of the premium is (1/8) ÷ (1/2) = 1/4. Hence, the amount received is ₹60,000 × 1/4 = ₹15,000. ₹45,000 belongs to the second partner because his sacrifice is greater. Exam tip: Goodwill premium brought by a new partner is distributed among old partners in their sacrificing ratio.

Under the old ratio of 3:2, the old partners’ shares were \(\frac{3}{5}\) and \(\frac{2}{5}\). Sacrifice = old share − new share. Thus, the first partner sacrifices \(\frac{3}{5}-\frac{2}{5}=\frac{1}{5}\), while the second sacrifices \(\frac{2}{5}-\frac{1}{5}=\frac{1}{5}\). Therefore, the sacrificing ratio is \(\frac{1}{5}:\frac{1}{5}=1:1\). Option B is the old ratio, not the sacrificing ratio. Exam tip: calculate the reduction in each old partner’s share separately.

New partner's premium is (₹125000 \times 2/5=₹50000). First and second together have (2/5), so they receive (₹20000).