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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 Rs. 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...
Given information:
A, B, and C are equal partners.
D is admitted to the firm for one-fourth share.
D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill.
To find:
The value of goodwill of the firm.
Solution:
Let the total value of the firm be 'x'.
As per the given information, initially the capital of A, B, and C is equal.
So, the capital of each partner is (1/3)x.
After D is admitted to the firm, the capital of each partner becomes (1/4)x.
So, the total capital of the firm after D's admission is (4/3)x.
Out of this, D brings Rs. 20,000 as capital.
So, the total capital of the firm before D's admission was (4/3)x - Rs. 20,000.
Now, D also brings Rs. 5,000 being half of the premium for goodwill.
So, the total premium for goodwill is Rs. 10,000.
Let the value of goodwill be 'y'.
So, (1/3)x + y = (4/3)x - Rs. 20,000 + Rs. 5,000
=> y = (4/3)x - (1/3)x + Rs. 15,000
=> y = x/3 + Rs. 15,000
Given that D is admitted for one-fourth share, which means the value of his share is (1/4)(4/3)x = (1/3)x.
So, (1/3)x = Rs. 20,000 + Rs. 2,500 (half of goodwill premium paid by D)
=> x = Rs. 90,000
Substituting this value in the equation for goodwill, we get:
y = Rs. 30,000 + Rs. 15,000
=> y = Rs. 45,000
Therefore, the value of goodwill of the firm is Rs. 45,000, which is option (B).
A, B, and C are equal partners.
D is admitted to the firm for one-fourth share.
D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill.
To find:
The value of goodwill of the firm.
Solution:
Let the total value of the firm be 'x'.
As per the given information, initially the capital of A, B, and C is equal.
So, the capital of each partner is (1/3)x.
After D is admitted to the firm, the capital of each partner becomes (1/4)x.
So, the total capital of the firm after D's admission is (4/3)x.
Out of this, D brings Rs. 20,000 as capital.
So, the total capital of the firm before D's admission was (4/3)x - Rs. 20,000.
Now, D also brings Rs. 5,000 being half of the premium for goodwill.
So, the total premium for goodwill is Rs. 10,000.
Let the value of goodwill be 'y'.
So, (1/3)x + y = (4/3)x - Rs. 20,000 + Rs. 5,000
=> y = (4/3)x - (1/3)x + Rs. 15,000
=> y = x/3 + Rs. 15,000
Given that D is admitted for one-fourth share, which means the value of his share is (1/4)(4/3)x = (1/3)x.
So, (1/3)x = Rs. 20,000 + Rs. 2,500 (half of goodwill premium paid by D)
=> x = Rs. 90,000
Substituting this value in the equation for goodwill, we get:
y = Rs. 30,000 + Rs. 15,000
=> y = Rs. 45,000
Therefore, the value of goodwill of the firm is Rs. 45,000, which is option (B).
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Community Answer
A, B and C are equal partners. D is admitted to the firm for one-fourt...
Half of the goodwill amount is Rs. 5000. So D's full share is 10000rs. D's share in profit is one-fourth. Hence total goodwill is 4 times of 10000 which amounts to 40000rs
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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 Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. Can you explain this answer?
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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 Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. 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, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. 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, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. Can you explain this answer?.
A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. 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, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. 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, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. Can you explain this answer?.
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ample number of questions to practice A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm isa)Rs. 10,000b)Rs. 40,000.c)Rs. 20,000.d)None of the above..Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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