X and Y are partners in a firm with capital of 1,80,000 and 2,00,000. Z was admitted for 1/3rd sharein profits and brings ₹ 3,40,000 as capital, calculate the amount of goodwill
Question
X and Y are partners in a firm with capital of 1,80,000 and 2,00,000. Z was admitted for 1/3rd sharein profits and brings ₹ 3,40,000 as capital, calculate the amount of goodwill
Solution
To calculate the amount of goodwill, we first need to determine the total capital of the firm after Z's admission.
Step 1: Calculate total capital after Z's admission The total capital of the firm after Z's admission is the sum of the initial capital of X and Y and the capital brought in by Z.
Total capital after Z's admission = Capital of X + Capital of Y + Capital brought by Z Total capital after Z's admission = 1,80,000 + 2,00,000 + 3,40,000 = ₹7,20,000
Step 2: Calculate the capital for 1/3rd share Since Z was admitted for 1/3rd share in profits, the capital for 1/3rd share would be 1/3rd of the total capital after Z's admission.
Capital for 1/3rd share = 1/3 * Total capital after Z's admission Capital for 1/3rd share = 1/3 * 7,20,000 = ₹2,40,000
Step 3: Calculate the amount of goodwill The amount of goodwill is the difference between the capital brought in by Z and the capital for 1/3rd share.
Amount of goodwill = Capital brought by Z - Capital for 1/3rd share Amount of goodwill = 3,40,000 - 2,40,000 = ₹1,00,000
So, the amount of goodwill is ₹1,00,000.
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