Answer based on following information

Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2 : 1 Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in 30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance sheet of Azad and Babli as on December 31, 2016 (before Chintan's admission) was as follows:

It was agreed that:

(i) Chintan will bring in ₹12,000 as his share of goodwill premium.

(ii) Buildings were valued at ₹45,000, and Machinery at ₹23,000.

(iii) A provision for doubtful debts is to be created at 6% on debtors.

(iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts.

Which of the following is not a factor affecting value of goodwill?

Number of partners

The correct answer is Option (3) → Number of partners.

The number of partners is not typically considered a factor affecting the value of goodwill. 

Goodwill is an intangible asset that represents the reputation, brand value, customer loyalty, and other non-physical assets of a business. The value of goodwill is influenced by several key factors, which can be summarized as follows:

* Nature of Business: Businesses engaged in the production of high-value products or those with stable and consistent demand tend to generate more profits. Consequently, such firms typically possess a higher level of goodwill.

* Location: The geographical location of a business can significantly impact its goodwill. A centrally located business or one situated in an area with heavy customer foot traffic is likely to have a greater goodwill value.

* Efficiency of Management: Well-managed businesses often achieve higher levels of productivity and cost-efficiency. This efficient management translates into increased profits, thereby contributing to a higher valuation of goodwill.

* Market Conditions: The competitive landscape and market conditions play a vital role in determining goodwill. Firms operating under monopoly conditions or facing limited competition often have the opportunity to earn substantial profits, resulting in a higher goodwill value.

* Special Advantages: Businesses that enjoy special advantages, such as exclusive import licenses, access to low-cost and reliable electricity, long-term contracts for essential materials, established collaborations, and ownership of patents and trademarks, are positioned to command a greater value of goodwill.