Asif and Chinmay are partners in a firm sharing profits and losses in the ratio of 5:4. They decide to share future profits in the ratio of 2:3. At that time, the goodwill appears at Rs 90,000 in the books of the firm. Goodwill appearing in the books will be written-off in :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → In old profit sharing ratio
Goodwill already in the books was built up while the old ratio was in force, so the old partners own it in that ratio. When it is written off before the change, their capital accounts are debited in the old profit sharing ratio of 5:4.
Asif = Rs. 90,000 × 5/9 = Rs. 50,000
Chinmay = Rs. 90,000 × 4/9 = Rs. 40,000
Why the other options are incorrect
Option (2) In new profit sharing ratio — Incorrect. The new ratio of 2:3 governs profits earned after the change. Writing off old goodwill in it would charge Chinmay for more than his share of an asset he owned only in 4/9.
Option (3) In gaining ratio — Incorrect. The gaining ratio is used to compensate the sacrificing partner for the current value of goodwill, a separate step from removing the old book figure.
Option (4) In equal ratio — Incorrect. Equal sharing applies only when the deed is silent on the ratio. Here the partners have an agreed ratio, so equal shares have no basis.
NCERT (2026-27 edition): |