Goodwill Settlement

The retiring partner’s goodwill compensation is borne by the gaining partners in their gaining ratio. B’s share is 4/(1+4) = 4/5. Therefore, B’s burden = ₹35,000 × 4/5 = ₹28,000. ₹14,000 represents an incorrect fraction of the total goodwill, not B’s share. Exam tip: Divide the total goodwill in the stated gaining ratio before calculating each partner’s burden.

When existing goodwill is written off, the partners’ Capital Accounts are debited in the old profit-sharing ratio. C’s share is \(5/(4+3+5)=5/12\). Thus, C’s Capital Account will be debited by \(₹1,20,000 \times 5/12 = ₹50,000\). Exam tip: use the old ratio for writing off existing goodwill; using the new ratio would make options such as ₹40,000 incorrect.

C's old share is three fourteenth and new share is one third. It increases so C's gain is not zero. Both A and C gain.

A's gain is seven forty second and C's gain is five forty second. Therefore the gaining ratio is 7:5.

A's gain is seven forty second and C's gain is five forty second. So the actual gaining ratio is 7:5.

Total parts are twelve and the first partner's share is seven twelfth. Seven twelfth of ₹ 72000 is ₹ 42000.

Total goodwill = Average profit × Number of years’ purchase = ₹96,000 × 2.5 = ₹2,40,000. The retiring partner’s share is ₹2,40,000 × 1/5 = ₹48,000. Therefore, option C is correct. Exam tip: Calculate the firm’s total goodwill first, then apply the retiring partner’s profit-sharing ratio.

Under the old ratio, A, B and C held 5/12, 3/12 and 2/12 respectively. Under the new ratio, their shares are 4/9, 1/3 and 2/9. Each new share is greater than the corresponding old share, so all three continuing partners gain rather than sacrifice. D’s share of 2/12 = 1/6 is acquired by the continuing partners. Exam tip: calculate new share − old share; a positive result indicates gain, while a negative result indicates sacrifice.

B and C's shares increase while A's share decreases. Therefore gainers B and C will bear goodwill burden.

Under the old ratio, B’s share was 3/12 and C’s share was 2/12. Under the new ratio, B’s share is 3/9, so B’s gain is 3/9 − 3/12 = 1/12. C’s gain is 2/9 − 2/12 = 1/18. Therefore, the gaining ratio of B and C is 1/12 : 1/18 = 3:2. Exam tip: calculate gaining ratio as new share minus old share; do not directly use the new ratio 3:2 without checking the gains.

D’s share of goodwill is ₹84,000, and B and C gain in the ratio 1:1. Therefore, the goodwill is borne equally by them: ₹84,000 × 1/2 = ₹42,000. B’s Capital Account will consequently be debited by ₹42,000, and C’s account will be debited by the same amount. Exam tip: Debit the gaining partners’ Capital Accounts in their gaining ratio when goodwill is adjusted on retirement.

When existing goodwill is written off, the capital accounts of all partners are debited in the old profit-sharing ratio. The second partner’s share is \(\frac{3}{2+3+5}=\frac{3}{10}\). Therefore, the amount debited is ₹1,50,000 × \(\frac{3}{10}\) = ₹45,000. ₹60,000 represents the third partner’s share of 5/10, so it is not correct. Exam tip: On writing off existing goodwill, debit the partners in their old ratio.

Old goodwill belongs to old partners and new goodwill burden is borne by gainers. Mixing both is a common mistake.

Before retirement, B’s share was 5/12, while the new share is 3/8. Since 5/12 − 3/8 = 1/24, B’s share decreases by 1/24, so B makes the sacrifice. C’s share increases from 3/12 to 5/8, making C the gaining partner. Exam tip: Compare each continuing partner’s old and new shares; a decrease indicates sacrifice.

C's share rises from three twelfth to five eighth so only C gains. Goodwill burden falls on the gainer.

C gets the whole gain so the full goodwill amount will be debited to C's capital. The retiring partner's account will be credited.

Full goodwill is credited to all old partners in old ratio. The second partner's share is four twelfth which is ₹ 60000.

The direct answer is A, the gaining ratio. When goodwill is raised at full value, the partners are initially credited according to the old ratio. When it is later written off, all partners are debited according to the new ratio. The net effect compares each partner’s old share with the new share. A partner whose new share is larger than the old share has gained; that partner bears the effective goodwill burden. A partner whose share falls is compensated through the adjustment. Thus the final economic burden is checked using the gaining ratio. Option A is correct. B, the old ratio, describes the earlier sharing arrangement and does not measure who gained. C, cash ratio, concerns cash proportions, not goodwill adjustment. D, drawings ratio, concerns withdrawals and is irrelevant. Memory cue: goodwill compensation follows the partners who gain.

Total goodwill = Super profit × Years’ purchase = ₹75,000 × 3 = ₹2,25,000. The deceased partner’s share of goodwill = ₹2,25,000 × \(\frac{2}{15}\) = ₹30,000. Therefore, option B is correct. Exam tip: Calculate the firm’s total goodwill first, and then multiply it by the deceased partner’s profit-sharing fraction.

The total gaining ratio is 2+3+5=10. The third partner’s share is therefore 5/10. His burden is ₹1,20,000 × 5/10 = ₹60,000. ₹36,000 would represent the second partner’s 3/10 share. Exam tip: Goodwill compensation for a retiring partner is generally borne by the continuing partners in their gaining ratio.

The required total debit was ₹1,08,000, whereas the actual debit was ₹1,00,000. The difference is ₹1,08,000 − ₹1,00,000 = ₹8,000, so the continuing partners’ capital accounts were under-debited by ₹8,000. To correct the error, an additional total debit of ₹8,000 should be made in the gaining ratio. Exam tip: subtract the recorded amount from the required amount; a positive difference indicates under-debiting.

Direct answer: option A, 27/120. The old ratio of A, B and C is 2:7:6, so total parts are 15. C’s old share is 6/15 = 2/5. After B retires, A and C share in 3:5, so the new total is 8 parts and C’s new share is 5/8. C’s gain means new share minus old share: 5/8 − 6/15. Taking denominator 120, 5/8 = 75/120 and 6/15 = 48/120; difference = 27/120. Option A is therefore correct. Option B, 25/120, results from an incorrect subtraction. Option C, 30/120, also does not equal the exact difference. Option D, 7/15, is not C’s gain; it is unrelated to the calculated change. The supplied answer is consistent. Memory cue: gain = new share − old share.

A's gain is twenty nine one hundred twentieth and C's gain is twenty seven one hundred twentieth. So the ratio is 29:27.

When a partner retires, the continuing partners compensate the retiring partner for the retiring partner’s share of goodwill. The compensation is divided between the gaining partners according to their gaining ratio. Here A and C gain in the ratio 29:27, so the total number of ratio parts is 56. C’s burden is therefore 27/56 of B’s goodwill. Calculation: ₹1,12,000 × 27/56. Since ₹1,12,000 ÷ 56 = ₹2,000, C’s share is ₹2,000 × 27 = ₹54,000. Hence option A is correct. The alternatives ₹56,000, ₹58,000 and ₹60,000 do not result from applying C’s 27/56 share to the stated goodwill amount.

The direct answer is A, Correct. In retirement or reconstitution, compare every continuing partner’s old share with the new share. If the new share is smaller, that partner has sacrificed part of his profit, so he is not a gainer. Goodwill compensation is charged only to partners whose shares increase, because they receive the benefit of the sacrificed share. Thus the statement is correct. Option A works because a decreasing share means sacrifice, not gain. Option B is wrong because it reverses the basic rule. Option C is wrong because the rule does not depend on whether payment is made in cash; it applies in the relevant goodwill adjustment under either method. Option D is wrong because the rule is not restricted to old goodwill; it concerns the burden of goodwill adjustment caused by the gaining partners. The exact reasoning is: new share less old share equals gain or sacrifice; a negative difference means sacrifice; only positive differences create a goodwill burden. Memory cue: gainers pay, sacrificers receive.