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The goodwill of a firm is valued at ₹1,20,000. A new partner acquires a 1/6 share in the profits and brings ₹12,000 in cash as goodwill premium. The old partners sacrifice their shares in the ratio 3:2. How much of the premium brought in cash will be credited to the second old partner?

Answer and explanation

Correct answer: ₹4,800

The premium implied by the firm’s goodwill valuation is ₹1,20,000 × 1/6 = ₹20,000, but the new partner brings only ₹12,000 in cash. This amount is credited to the old partners in their sacrificing ratio. The second partner receives 2/5 of it: ₹12,000 × 2/5 = ₹4,800.

Related tags

Goodwill AccountingAdmission Of A PartnerSacrificing RatioGoodwill PremiumReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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