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If the estimated total capital is equal to the actual total capital, what will be the value of hidden goodwill?

Answer and explanation

Correct answer: Zero

Hidden goodwill = Estimated total capital − Actual total capital. When both capital amounts are equal, their difference is zero; therefore, hidden goodwill is zero. Hence, option A is correct. Exam tip: Hidden goodwill arises only when the estimated total capital exceeds the actual total capital.

Related tags

Hidden GoodwillGoodwill AccountingCapital ComparisonPartnership AdmissionReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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