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A, B and C are partners sharing profits and losses in the ratio of 3:2:1. C retires on a decided date and Goodwill of the firm is to be valued at Rs. 60,000. Find the amount payable to retiring partner on account of goodwill.
- a)Rs. 30,000.
- b)Rs. 20,000.
- c)Rs. 10,000.
- d)Rs. 60,000.
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
A, B and C are partners sharing profits and losses in the ratio of 3:2...
Given:
- A, B, and C are partners sharing profits and losses in the ratio of 3:2:1.
- C retires on a decided date.
- Goodwill of the firm is to be valued at Rs. 60,000.
We need to find the amount payable to the retiring partner on account of goodwill.
To calculate the amount payable to the retiring partner on account of goodwill, we can use the following formula:
Amount Payable = (Total Goodwill * Retiring Partner's Share) / Total Partners' Share
Let's calculate the amount payable to the retiring partner:
1. Calculate the total share of A, B, and C:
- Total share = 3 + 2 + 1 = 6
2. Calculate the retiring partner's share (C's share):
- C's share = 1/6 * Total Goodwill
- C's share = 1/6 * Rs. 60,000 = Rs. 10,000
Therefore, the amount payable to the retiring partner on account of goodwill is Rs. 10,000.
Hence, the correct answer is option C: Rs. 10,000.
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Community Answer
A, B and C are partners sharing profits and losses in the ratio of 3:2...
Understanding Goodwill in Partnerships
In a partnership, goodwill represents the intangible value of the business, often calculated during the retirement of a partner. In this case, C is retiring, and the firm's goodwill is valued at Rs. 60,000.
Profit Sharing Ratio
The partners share profits and losses in the ratio of 3:2:1, which corresponds to:
- A = 3 parts
- B = 2 parts
- C = 1 part
Calculating C's Share of Goodwill
To determine how much C should receive from the goodwill, we need to calculate C's share based on the total goodwill value:
- Total parts in the ratio = 3 + 2 + 1 = 6 parts
- C's share of the goodwill = (C's share in the ratio / Total parts) × Total Goodwill
This can be calculated as follows:
- C's share = (1/6) × Rs. 60,000
Calculation
- C's share = Rs. 10,000
Conclusion
Thus, the amount payable to the retiring partner C on account of goodwill is:
- **Rs. 10,000**
This aligns with option 'C'.
By understanding the distribution of goodwill in partnerships, it becomes clear how retiring partners receive their financial entitlements, ensuring a fair settlement based on their share in the partnership.
In a partnership, goodwill represents the intangible value of the business, often calculated during the retirement of a partner. In this case, C is retiring, and the firm's goodwill is valued at Rs. 60,000.
Profit Sharing Ratio
The partners share profits and losses in the ratio of 3:2:1, which corresponds to:
- A = 3 parts
- B = 2 parts
- C = 1 part
Calculating C's Share of Goodwill
To determine how much C should receive from the goodwill, we need to calculate C's share based on the total goodwill value:
- Total parts in the ratio = 3 + 2 + 1 = 6 parts
- C's share of the goodwill = (C's share in the ratio / Total parts) × Total Goodwill
This can be calculated as follows:
- C's share = (1/6) × Rs. 60,000
Calculation
- C's share = Rs. 10,000
Conclusion
Thus, the amount payable to the retiring partner C on account of goodwill is:
- **Rs. 10,000**
This aligns with option 'C'.
By understanding the distribution of goodwill in partnerships, it becomes clear how retiring partners receive their financial entitlements, ensuring a fair settlement based on their share in the partnership.
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A, B and C are partners sharing profits and losses in the ratio of 3:2:1. C retires on a decided date and Goodwill of the firm is to be valued at Rs. 60,000. Find the amount payable to retiring partner on account of goodwill.a)Rs. 30,000.b)Rs. 20,000.c)Rs. 10,000.d)Rs. 60,000.Correct answer is option 'C'. Can you explain this answer?
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