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
The passage gives no profit sharing ratio for Preeti, Kabir and Shershah. Where the agreement is silent, the Partnership Act makes partners share profits equally, so Kabir’s share is 1/3. His share of goodwill is that fraction of the firm’s goodwill.
Kabir’s share of goodwill = 1/3 of the firm’s goodwill = ₹15,000
Firm’s goodwill = ₹15,000 × 3 = ₹45,000
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