goodwill is the excess of desired total capital of the firm over the actual combined capital of all partners.

Asha, Ashish and Naman were partners in a firm sharing profits and losses in the ratio of 2 : 5 : 3. The firm closes its books on 31^st March every year. On 31^st December, 2024 Ashish died. On the date of his death, there was a balance of ₹3,00,000 in his capital account and ₹2,00,000 in General Reserve.
The partnership deed provided that on the death of a partner, his representatives will be entitled to the following:
(i) Balance in the capital account and interest on the same @ 10% p.a.
(ii) His share in the goodwill of the firm. The goodwill of the firm on Ashish’s death was valued at ₹6,00,000.
(iii) His share in the profits of the firm to be calculated on the basis of previous year’s profit. The profit of the firm for the year ended 31^st March, 2024 was ₹3,60,000.
Prepare Ashish’s Capital Account to be presented to his executors.

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There are two statements:
Statement I: The balance in the Statement of Profit and Loss in the Balance Sheet of Samta Ltd. showed a deficit of \rupee2,00,000 on 31.03.2023 and a surplus of \rupee3,00,000 on 31.03.2024. \rupee5,00,000 will be considered as profit earned during the year for preparing Cash Flow Statement.
Statement II: On 31.03.2023 the goodwill account of Zeeta Ltd. showed a balance of \rupee4,00,000 and on 31.03.2024 it showed a balance of \rupee5,00,000. \rupee1,00,000 will be considered as goodwill acquired during the year for the preparation of Cash Flow Statement.
Choose the correct option from the following:

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Mita and Vihaan were partners in a firm sharing profits and losses in the ratio of 3:2.

On 31st March, 2024 their Balance Sheet was as follows:

Balance Sheet of Mita and Vihaan as at 31st March, 2024

Liabilities	Amount (₹)	Assets	Amount (₹)
Sundry Creditors	2,00,000	Cash	50,000
Capitals:		Sundry Debtors	2,00,000
Mita	4,00,000	Less: Provision for Doubtful Debts	(7,000)
Vihaan	3,00,000		1,93,000
		Stock	2,50,000
		Plant and Machinery	3,50,000
		Patents	57,000
Total	9,00,000	Total	9,00,000

On the above date, Zen was admitted as a new partner for 4/15 share in the profits on the following terms:

Zen will bring ₹3,00,000 as his capital and his share of goodwill premium in cash. On Zen’s admission, goodwill of the firm was valued at ₹4,12,500.
The provision for bad debts will be maintained at 5% of the debtors.
Stock will be valued at ₹2,00,000, plant and machinery at ₹4,00,000 and patents at ₹1,20,000.
There was a bill of ₹30,000 for goods purchased which was omitted from the books.

Pass necessary journal entries for the above transactions in the books of the firm on Zen’s admission

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Jeevan and Kavi were partners in a firm with capitals of ₹12,00,000 and ₹15,00,000 respectively. Annual salary of the partners was ₹2,00,000 each. The market rate of interest was 10%. During the previous three years the profits were ₹8,00,000, ₹9,00,000 and ₹7,00,000. The goodwill of the firm is to be valued at 2 years’ purchase of the last 3 years’ average super profits.
Calculate the goodwill of the firm.

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Giri and Shyam were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were ₹1,60,000 and ₹1,00,000 respectively. Hema was admitted for $\dfrac{1}{5}$ share in the profits of the firm. Hema brought ₹1,50,000 as her capital. The goodwill of the firm on Hema’s admission was:

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______ goodwill is the excess of desired total capital of the firm over the actual combined capital of all partners.

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The Correct Option is D

Solution and Explanation

Top Questions on Goodwill Valuation

Balance Sheet of Mita and Vihaan as at 31st March, 2024

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