L and M are partners sharing profits in the ratio 3:2. N is admitted as a partner for 1/5th of the share which is acquired from L. Goodwill of the firm is valued at ₹40,000 on N's admission. N will have to pay for Goodwill:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 8,000 to L
The premium for goodwill is a compensation for the share of profit given up, so it goes only to the partner or partners who sacrificed, in their sacrificing ratio. Here N takes his whole share from L, so L alone sacrifices and L alone is paid.
Goodwill of the firm = Rs. 40,000
N’s share = 1/5
N’s share of goodwill = Rs. 40,000 × 1/5 = Rs. 8,000
Sacrificing ratio: L gives 1/5, M gives nothing
Amount paid to L = Rs. 8,000; to M = nil
Splitting the Rs. 8,000 between L and M in the old ratio 3:2 would pay M for a share he never gave up.
NCERT (2026-27 edition): |