Question

Sona, Mona and Raghav were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. Raghav retired. The balance in Raghav’s capital account after making the necessary adjustments on account of reserves and revaluation of assets and liabilities was ₹2,20,000. Sona and Mona agreed to pay him ₹4,00,000 in full settlement of his claim. Raghav’s share of goodwill in the firm was:

• A. ₹2,20,000
• B. ₹1,80,000
• C. ₹4,00,000
• D. ₹40,000

Hint:

Goodwill share of retiring partner = Final settlement amount – adjusted capital balance.

Answer 1

The Correct Option is B

Amount paid to Raghav on retirement = ₹4,00,000
Balance in his capital account after adjustments = ₹2,20,000

Difference = Excess amount paid over capital = Raghav’s share of goodwill
$\Rightarrow$ Goodwill share = ₹4,00,000 – ₹2,20,000 = ₹1,80,000

Hence, Raghav’s share of goodwill = ₹1,80,000