Question

Amrita and Kalyani are partners sharing profits in the ratio of 3 : 2. They decided to expand the business by admitting Suraj as a new partner for 1/4th share. Suraj’s share of goodwill is valued at Rs 90,000 for which he compensated Amrita and Kalyani in the ratio 1 : 4. Following information is also provided:

• Machinery : Rs 25,00,000
• Land : Rs 10,00,000
• Computer : Rs 2,50,000
• Workmen compensation fund : Rs 5,30,000

Claim against workmen compensation is Rs 2,00,000 and goodwill appeared in the books at Rs 60,000.
Goodwill brought by Suraj will be distributed as:

• A. Rs 54,000 ; Rs 36,000
• B. Rs 2,16,000 ; Rs 1,44,000
• C. Rs 18,000 ; Rs 72,000
• D. Rs 72,000 ; Rs 18,000

Hint:

While there will be many details, always focus on key points for faster answers.

Answer 1

The Correct Option is C

Distribution of Goodwill:
When a new partner joins a firm, the existing partners are compensated by the new partner as the old partners' share is being decreased.
Step 1: Determine Goodwill Compensation Ratio
Total Value of Goodwill share Rs 90,000
Amrita and Kalyani are being compensated in the ratio 1:4. So Suraj will compensate:
Amrita with Rs 90,000*(1/5) = Rs 18,000
Kalyani with Rs 90,000*(4/5) = Rs 72,000