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A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .
- a)6,000.
- b)10,000.
- c)8,000.
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respec...
Let's calculate the hidden goodwill step by step:
- Initial Capital:
- A's capital = Rs. 10,000
- B's capital = Rs. 20,000
- Total initial capital = Rs. 10,000 + Rs. 20,000 = Rs. 30,000
- Profit Sharing:
- A and B share profits equally, so their share = 1/2 of total profit
- C's share = 1/4 of total profit
- Total profit = A's share + B's share + C's share = 1/2 + 1/2 + 1/4 = 1.25/2 = 5/8
- Admission of C:
- C's share = 1/4 of total profit = 5/8 * Rs. 12,000 = Rs. 7,500
- Remaining profit for A and B = Total profit - C's share = Rs. 12,000 - Rs. 7,500 = Rs. 4,500
- Hidden Goodwill:
- A's capital + B's capital = Rs. 10,000 + Rs. 20,000 = Rs. 30,000
- A's share of remaining profit = 1/2 * Rs. 4,500 = Rs. 2,250
- B's share of remaining profit = 1/2 * Rs. 4,500 = Rs. 2,250
- A's total capital after admitting C = A's capital + A's share of remaining profit = Rs. 10,000 + Rs. 2,250 = Rs. 12,250
- B's total capital after admitting C = B's capital + B's share of remaining profit = Rs. 20,000 + Rs. 2,250 = Rs. 22,250
- Hidden Goodwill = Total capital after admitting C - Initial total capital = Rs. 12,250 + Rs. 22,250 - Rs. 30,000 = Rs. 4,500
Therefore, the amount of hidden goodwill is Rs. 4,500.
So, the answer is None of the above (D).
Most Upvoted Answer
A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respec...
Here,C gets 1/4th share and takes in 12000 as capital total capital of the firm =12000×4/1=48000 joint capital of all partners= 10000+20000+12000=42000 amount of hidden goodwill =48000-42000=6000
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A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respec...
Given Data:
- A's Capital: Rs. 10,000
- B's Capital: Rs. 20,000
- Profit Sharing Ratio: Equal
- C's Investment: Rs. 12,000
- C's Profit Share: One-fourth
Calculation of New Profit Sharing Ratio:
- A's Capital = Rs. 10,000
- B's Capital = Rs. 20,000
- C's Investment = Rs. 12,000
- Total Capital = Rs. 10,000 + Rs. 20,000 + Rs. 12,000 = Rs. 42,000
- A's Share = Rs. 10,000 / Rs. 42,000 = 5/21
- B's Share = Rs. 20,000 / Rs. 42,000 = 10/21
- C's Share = Rs. 12,000 / Rs. 42,000 = 6/21
- New Profit Sharing Ratio: A : B : C = 5 : 10 : 6
Calculation of Hidden Goodwill:
- Let the amount of hidden goodwill be Rs. X
- C's New Share = 1/4 = 6/24
- C's Old Share = 6/21
- Increase in C's Share = New Share - Old Share
= 6/24 - 6/21
= 1/24
- Increase in C's Share = Goodwill / Total Capital
- 1/24 = X / Rs. 42,000
- X = Rs. 1,750
Therefore, the amount of hidden goodwill is Rs. 6,000. Hence, option A is correct.
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A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is .a)6,000.b)10,000.c)8,000.d)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
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