Answer the questions from based on following paragraph.
Preeti, Kabir and Shershah are partners in a firm. Kabir retires from the firm. On his date of retirement, ₹1,00,000 became due to him. Preeti and Shershah promised to pay him in four yearly equal installments plus interest @ 12% p.a. on the unpaid balance every year at the end of the year, to which he agreed.
In case at the time of retirement of Kabir, his share of goodwill is valued at ₹15,000, then what will be the total value of firm valued goodwill on his retirement?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹45,000.
As no information is given about profit sharing ratio, So profit is shared equally i.e. 1:1:1.
Kabir share in goodwill = 15,000
For 1/3rd share goodwill share is 15,000
Firm goodwill = Kabir share x Reciprocal of his share
= 15,000 x 3/1
= 45,000
So, firm goodwill is 45,000.