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A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and R.s 5,000 being half of the premium for goodwill. The value of goodwill of the firm is 
  • a)
    Rs. 10,000
  • b)
    Rs. 40,000
  • c)
    Rs. 20,000
  • d)
    None of the above
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A, B and C are equal partners. D is admitted to the firm for one-fourt...
Calculation of Goodwill Value:
- Total capital of A, B, and C = 3 partners x Rs. 20000 each = Rs. 60000
- Total capital after admission of D = Rs. 60000 + Rs. 20000 = Rs. 80000
- D's share of capital = 1/4 of Rs. 80000 = Rs. 20000
- Total premium for goodwill = Rs. 5000 x 2 = Rs. 10000 (as D pays half of the premium)
- Total capital + goodwill = Rs. 80000 + Rs. 10000 = Rs. 90000

Value of Goodwill:
- The value of goodwill of the firm is calculated by subtracting the total capital from the total capital + goodwill.
- Goodwill Value = Rs. 90000 - Rs. 80000 = Rs. 10000
Therefore, the correct answer is option B) Rs. 40,000.
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Community Answer
A, B and C are equal partners. D is admitted to the firm for one-fourt...
5000×2(half)=10000×4(equal four partners)=40000
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A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and R.s 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000c)Rs. 20,000d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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