Question

Rohit, Udit, and Mohit were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Mohit retired. The balance in his capital account after making the necessary adjustments on account of reserves and revaluation of assets and liabilities was rupee 1,80,000. Rohit and Udit agreed to pay him rupee 2,00,000 in full settlement of his claim. Mohit’s share of goodwill in the firm was:

• A. rupee 1,80,000
• B. rupee 2,00,000
• C. rupee 40,000
• D. rupee 20,000

Hint:

When a partner retires and receives an amount higher than their capital account balance, the difference represents their share of goodwill.

Answer 1

The Correct Option is D

1. Balance in Mohit’s Capital Account after adjustments = rupee 1,80,000 

2. Total amount agreed to be paid in full settlement = rupee 2,00,000 

3. Mohit’s Share of Goodwill Calculation: \[ {Mohit’s Share of Goodwill} = {Final Settlement Amount} - {Capital Account Balance} \] \[ = rupee 2,00,000 - rupee 1,80,000 = rupee 20,000 \] 

Thus, Mohit’s share of goodwill in the firm is rupee20,000 (Option D).