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If gaining ratio is (3:2) and total goodwill compensation is ₹25000 then what burden falls on the smaller share partner?

Answer and explanation

Correct answer: ₹10000

The direct answer is A: the smaller-share partner bears ₹10,000. The gaining ratio is 3:2, so total ratio parts are 3 + 2 = 5. The goodwill compensation of ₹25,000 is divided into five equal parts: ₹25,000 ÷ 5 = ₹5,000 per part. The smaller share is 2 parts, so its burden is 2 × ₹5,000 = ₹10,000, or equivalently ₹25,000 × 2/5 = ₹10,000. Option A is correct. Option B, ₹15,000, is the amount for the larger 3-part share, not the smaller one. Option C, ₹25,000, is the whole compensation and ignores the ratio. Option D, ₹5,000, represents only one ratio part, while the smaller partner has two parts. Memory cue: add ratio parts, find one part, then multiply by the required partner's parts.

Related tags

AccountancyNumericalBurden Sharing

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